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3. Question 2: Job Costing vs. ABC Costing Time: 35 minutes Total: 18 marks Wyoming Manufacturing Limited has a traditional costing system in which it
3. Question 2: Job Costing vs. ABC Costing Time: 35 minutes Total: 18 marks Wyoming Manufacturing Limited has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labour-hours (DLHs). The company has two products, Widgets and Trinkets, about which it has provided the following data: Widgets Trinkets Direct Materials per unit $10.50 $61.80 Direct Labour per unit $2.00 $9.00 Direct labour hours per unit 0.20 0.90 Annual production 45,000 10,000 The firms estimated total manufacturing overhead for the year is $1,521,960 and the firms estimated total direct labour-hours for the year is 18,000. The company is considering using activity-based costing to determine its unit product costs. Data for this proposed activity-based costing system appear below: Activities Widgets Trinkets Total Supporting direct labour 9,000 9,000 18,000 Setting up machines 814 374 1,188 Parts administration 924 1,012 1,936 Activities & Drivers Estimated MOH cost Supporting direct labour (DLH) $352,000 Setting up machines (setups) $201,960 Parts Administration (part types) $968,000 Total $1,521,960 Required: a. Determine the unit product cost of each of the companys two products under the traditional costing system. (6 marks) b. Determine the unit product cost of each of the companys two products under activity-based costing system.
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