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Cabanos Company manufactures two products, Product C and Product D. The company estimated it would incur $160,790 in manufacturing overhead costs during the current period.
Cabanos Company manufactures two products, Product C and Product D. The company estimated it would incur $160,790 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:
*Using Excel form*
Extra Credit ABC Problem: Notes: This Extra Credit problem is due at NOON on Monday, November 1. No late submission will be accepted, ABSOLUTELY POSITIVELY!!! You can earn up to 10 points and your extra points will be added to your Test (II). You have to use Excel in solving this problem. Cabanos Company manufactures two products, Product C and Product D. The company estimated it would incur $160,790 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 C Product D Estimated volume. 3,400 units 4,800 units Direct labor-hours per unit 1.40 hour 1.90 hours Direct materials cost per unit. $7.40 $12.70 Direct labor cost per unit....... $14.00 $19.00 Required: a. Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year. 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: Activity Cost Pool Machine setups.. Purchase orders.. General factory Estimated Overhead Costs $ 12,190 79,200 69.400 $160,790 Expected Activity Product C Product D 80 150 730 920 4,760 9,120 Total 230 1,650 13,880 Determine the unit product cost of each product for the current period using the activity-based costing approach c. Explain why product costs for Product C and D are different between current method and ABC method
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