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Burnese Mountain Inc. manufactures two products, Product C and Product D. The company estimated it would incur $130,890 in manufacturing overhead costs during the current
Burnese Mountain Inc. manufactures two products, Product C and Product D. The company estimated it would incur $130,890 in manufacturing overhead costs during the current period. Overhead currently is assigned to the products on the basis of direct labor hours. Data concerning the current period's operations appear below: Product C Product D Estimated volume 400 units 1,200 units Direct labor hours per unit 0.70 hour 1.20 hours Direct materials cost per unit $10.70 $16.70 Direct labor cost per unit $11.20 $19.20 Expected Activity Estimated Overhead Activity Total Activity Product C Costs Product D Machine setups $13,570 230 100 130 Purchase orders 91,520 2,080 810 1,270 General factory 25,800 1,720 280 1,440 $130,890 1. Compute the cost per unit of each product using the traditional method (current method being used). (7 points) 2. The company is considering using an activity-based costing system instead of the traditional system. The information that would be used to determine the overhead cost is provided below. Compute the per unit cost of Product C and Product D using the activity-based costing method. (13 points)
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