Deluxe Standard

Direct materials per unit $ 61.00 $ 49.00

Direct labor per unit $ 19.00 $ 15.60

Direct labor-hours per unit 0.70 DLHs 1.40 DLHs

Estimated annual production 10,000 units 50,000 units

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Estimated total manufacturing overhead $ 481,000

Estimated total direct labor-hours 77,000 DLHs Required:

1. Determine the unit product costs of the Deluxe and Standard products under the companys traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools:

Expected Activity Activity Cost Pools and Activity Measures Estimated Overhead Cost Deluxe Standard Total Supporting direct labor (direct labor-hours) $ 308,000 7,000 70,000 77,000

Batch setups (setups) 111,000 200 100 300

Safety testing (tests) 62,000 30 70 100

Total manufacturing overhead cost $ 481,000 Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.