cost Management

Problem 2 Cabanos Company manufactures two products, Produd C and Product D. The company entimated 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 labour hours. Data concerning the current period's operations appear below. Product C Product D Estimated Volume (units) 3,400 4.800 Direct Labour Hours per Unit 1.40 1.90 Direct Materials Cost per Unit $7.40 $12.70 Direct Labour Cost per Unit $14.00 $19.00 Required 14 marks) a Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year. (3 marks) b. The company is considering using an activity-based costing system to compute unit produd costs for external financial reports instead of its traditional system based on direct labour 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 Est. Overhead Cost Expected Activity Product C Product D Total Machine setups $12, 190 80 150 230 Purchase orders 79,200 730 920 1.650 General factory 69,400 4,760 9.120 13,880 Total $160,790 Determine the unit product oost of each product for the current period using the activity-based costing approach (9 marks) c. Explain whether or not it would advantageous to implement an ABC system (2 marks) BD 00