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Carlton's Kitchens makes two types of pasta makers: Strands and Shapes. The company expects to manufacture 60,000 units of Strands, which has a per-unit
Carlton's Kitchens makes two types of pasta makers: Strands and Shapes. The company expects to manufacture 60,000 units of Strands, which has a per-unit direct material cost of $12 and a per-unit direct labor cost of $75. It also expects to manufacture 40,000 units of Shapes, which has a per-unit material cost of $18 and a per- unit direct labor cost of $50. It is estimated that Strands will use 120,000 machine hours and Shapes will require 80,000 machine hours. Historically, the company has used the traditional allocation method and applied overhead at a rate of $30.81 per machine hour. It was determined that there were three cost pools, and the overhead for each cost pool is shown: Machine Setups $75,000 Machine Processing 6,000,000 Material Requisitions 87,500 $6,162,500 Total Overhead The cost driver for each cost pool and its expected activity is shown: Strands Shapes Total Machine Setups Machine Hours 100 200 300 120,000 80,000 200,000 Parts Requisitions 70 105 175 A. What is the per-unit cost for each product under the traditional allocation method? Round your answers to two decimal places. Total per unit cost $ Strands Shapes $ B. What is the per-unit cost for each product under ABC costing? Round your answers to two decimal places. Strands Shapes Total cost $ C. Compared to ABC costing, was each product's overhead under- or overapplied? D. By how much was overhead under- or overapplied for each product? Round your answers to two decimal places.
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