Question
Bullie Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on
Bullie Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHS). The company has two products, D31X and U75X, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production (units) D31X U75X 32.40 $ 50.10 1.80 $ 24.60 0.15 2.30 45,000 20,000 The company's estimated total manufacturing overhead for the year is $1,650,147 and the company's estimated total direct labor-hours for the year is 45,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Assembling products (DLHS) Preparing batches (batches) Axial milling (MHS) Total Assembling products Preparing batches Axial milling Required: Estimated Overhead Cost $ 200,000 300,100 1,150,047 $ 1,650,147 D31X U75X Total 6,500 39,500 45,000 760 1,840 1,395 2,155 1,215 3,055 a. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system. b. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.
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