Question
Cabio Company manufactures two products, Product C and Product D. The company estimated it would incur $180,910 in manufacturing overhead costs during the current period.
Cabio Company manufactures two products, Product C and Product D. The company estimated it would incur $180,910 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 periods operations appear below:
Product C | Product D | |||||||
Estimated volume | 3,950 | units | 3,150 | units | ||||
Direct labor-hours per unit | 1.50 | hours | 1.60 | hours | ||||
Direct materials cost per unit | $ | 13.10 | $ | 25.50 | ||||
Direct labor cost per unit | $ | 15.00 | $ | 16.00 | ||||
|
Required:
a-1. Compute the predetermined overhead rate under the current method. (Round your answer to 2 decimal places.)
a-2. Determine the unit product cost of each product for the current year. (Round your intermediate calculations and final answers to 2 decimal places.)
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:
Estimated | Expected Activity | |||||||
Activity Cost Pools | Overhead Cost | Product C | Product D | Total | ||||
Machine setups | $ | 12,490 | 140 | 150 | 290 | |||
Purchase orders | 76,140 | 880 | 1,220 | 2,100 | ||||
Order size | 92,280 | 5,925 | 5,040 | 10,965 | ||||
Total | $ | 180,910 | ||||||
Determine the unit product cost of each product for the current period using the activity-based costing approach. (Round your intermediate calculations and final answers to 2 decimal places.)
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