Question
Harrison Company makes two products and uses a conventional costing system in which a single plantwide, predetermined overhead rate is computed based on direct labour-hours.
Harrison Company makes two products and uses a conventional costing system in which a single plantwide, predetermined overhead rate is computed based on direct labour-hours. These products are customized to some degree for specific customers. Data for the two products for the upcoming year follow:
Rascon | Parcel | |||||
Direct materials cost per unit | $ | 29.60 | $ | 22.80 | ||
Direct labour cost per unit | $ | 20.70 | $ | 4.60 | ||
Direct labour-hours per unit | 0.90 | 0.30 | ||||
Number of units produced | 31,000 | 121,000 | ||||
Required:
1. The companys manufacturing overhead costs for the year are expected to be $868,000. Using the companys traditional costing system, compute the unit product costs for the two products. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
2. Management is considering an ABC system in which half of the overhead would continue to be allocated on the basis of direct labour-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:
Rascon | Parcel | Total | |
Engineering design time (in hours) | 5,800 | 2,900 | 8,700 |
Compute the unit product costs for the two products using the proposed ABC system. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
3. This part of the question is not part of your Connect assignment.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started