Exercise 3A-3 Activity-Based Absorption Costing as an Alternative to Traditional Product Costing [LO3-8]

Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the companys two product lines appear below:

	Deluxe			Standard
Direct materials per unit	$	51.00		$	39.00
Direct labor per unit	$	9.00		$	7.60
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	$433,000
Estimated total direct labor-hours	50,000	DLHs

Required:
1.	Determine the unit product costs of the Deluxe and Standard products under the companys traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)

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)	$	300,000	10,000	40,000	50,000
Batch setups (setups)		81,000	200	100	300
Safety testing (tests)		52,000	30	70	100
Total manufacturing overhead cost	$	433,000

Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system. (Round your intermediate calculations and final answers to 2 decimal places.)