Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Alabama Company manufactures two products, Product A and Product B. The company estimated it would incur $160,970 in manufacturing overhead costs during the current period.
Alabama Company manufactures two products, Product A and Product B. The company estimated it would incur $160,970 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below:
Product A Product B Estimated volume 4,200 units 6,000 units Direct labor-hours per unit 1.20 hour 2.20 hours Direct materials cost per unit $ 8.60 $ 13.00 Direct labor cost per unit $ 10.20 $ 19.00 b. The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor-hours. The activity-based costing system would use three activity cost pools. Data relating to these activities for the current period are given below: Expected Activity Estimated Overhead Costs Activity Cost Pool Product A Product B Total Machine setups $ 12,200 70 160 230 Purchase orders 79,220 70 720 486 720 180 930 3:02 1,650 230 1,650 13.88 69,550 69,50 4,86 9,02 General Factory (square feet) 13,88 $ 160,97 Determine the unit product cost of product A for the current period using the activity-based costing approach (ie the total of direct materials, direct labor and overhead per unit). C At the end of the year, records show that 18,500 hours of direct labor were used and actual overhead costs were $160,800. What is the over- or under-applied overhead for the year? Be sure to indicate whether it is over or under applied
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started