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Chang Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct
Chang 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, Plain and Fancy, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production Plain $ 26.20 $ 4.60 0.30 45,000 Fancy $ 61.00 $ 23,00 1.50 10,000 The company's estimated total manufacturing overhead for the year is $1,174,200 and the company's estimated total direct labor-hours for the year is 28,500. 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 Supporting direct labor (DLHS) Setting up machines (setups) Parts administration (part types) Total Estimated Overhead Cost $ 541,500 213.940 418.760 $1,174,200 DLHS Setups Plain 13,500 1,264 692 Expected Activity Fancy 15,000 988 410 Total 28,500 2.252 1,102 Part types The manufacturing overhead that would be applied to a unit of Plain under the company's traditional costing system is closest to: $17.73 $30.09. $12.36. $5.70
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