Activity-Based Costing Versus Traditional Approach. Techno Company produces a regular computer monitor that sells for $175 and a flat panel computer monitor that sells for $300. Last year, total overhead costs of $3,675,000 were allocated based on direct labor hours. A total of 63,000 direct labor hours were required last year to build 36,000 regular monitors (1.75 hours per unit), and 42,000 direct labor hours were required to build 12,000 flat panel monitors (3.50 hours per unit). Total direct labor and direct materials costs for last year were as follows: Regular Monitor Flat Panel Monitor

Direct materials $1,908,000 $ 900,000

Direct labor $1,728,000 $1,200,000

The management of Techno Company would like to use activity-based costing to allocate overhead rather than one plant-wide rate based on direct labor hours. The following estimates are for the activities and related cost drivers identified as having the greatest impact on overhead costs.

Regular Monitor Flat Panel Monitor

Direct materials $1,908,000 $ 900,000

Direct labor $1,728,000 $1,200,000

The management of Techno Company would like to use

activity-based costing to allocate overhead rather than one plant-wide rate based on

direct labor hours. The following estimates are for the activities and related cost drivers identified as having the greatest impact on overhead costs.

Required:

a. Calculate the direct materials cost per unit and direct labor cost per unit for each product.

b. calculate the predetermined overhead rate

c. calculate the overhead cost per unit

d. calculate the product cost per unit.

e. Using the activity-based costing allocation method, calculate the predetermined overhead rate

for each activity

f. What is the product cost per unit for the regular and flat panel products?

g. Calculate the per unit profit for each product.

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