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15. Lion el Corporation manufactures two products, Product B and Product H. Product H is of fairly recent origin, having been developed as an attempt
15. Lion el Corporation manufactures two products, Product B and Product H. Product H is of fairly recent origin, having been developed as an attempt to enter a market closely related o that of Product B. Product H is the more complex of the two products, requiring two ours of direct labor time per unit to manufacture compared to one hour of direct labor time for Product B. Product H is produced on an automated production line. Overhead is currently assigned to the products on the basis of direct-labor hours. The company estimated it would incur $450,000 in manufacturing overhead costs and produce 7,500 units of Product H and 30,000 units of Product B during the current year. Unit costs for materials and direct labor are: Product B Product H Direct material Direct labor $12 $10 $25 $20 Required 1.) Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year 2.) The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Estimated Expected Activity Overhead Product Product Costs BH Activity Cost Pools Machine setups required $180,000 Purchase orders issued Machine-hou Maintenance requests issued 138.968 Total 1,800 600 rs required 92,650 6,800 10,200 17,000 1,600 600 1,200 100 38,382 500 693 907 S450,000 Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year. Page 6
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