Chapter 05 Assignment (03) Exercise (01): MF Company produces two products: Milk Juice Direct labor hour / unit 0.4 hour 0.2 hour Units produced 10,000 40,000 Direct material L.E. 16 L.E.9 Direct labor wage rate L.E.7 / hour L.E.7 / hour Additional information: Products Activity cost pool Cost Driver Overhead cost Milk Juice Total Machine set-up No. of set-ups L.E.32,000 50 150 200 Machining Machine hours L.E. 100,000 1,500 1,000 2.500 Assembly Direct labor hours L.E.468,000 4,000 8,000 12,000 Required: 1- Allocate manufacturing overhead cost using the traditional approach using the direct labor hours as the cost driver. 2- Allocate manufacturing overhead cost using the Activity Based Costing (ABC) approach. 3- Compute the product cost / unit under both approaches and comment on the results