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I need help with my accounting homework. I've attached the questions. Bangles Company manufactures two products, Product C and Product D. The company estimated it
I need help with my accounting homework. I've attached the questions.
Bangles Company manufactures two products, Product C and Product D. The company estimated it would incur $130,890 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor hours. Data concerning the current period's operations appear below: Estimated unit production Direct labor hours per unit Direct materials cost per unit Direct labor cost per unit Product C 400 units 0.70 hour $10.70 $11.20 Product D 1,200 units 1.20 hours $16.70 $19.20 Required: 1. Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year. 2. The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor hours. The activity-based costing system would use three activity cost pools. Determine the unit product cost of each product for the current period using the activity-based costing approach. Data relating to these activities for the current period are given in Exhibit 1. 3. Why do product costs determined using traditional overhead allocation differ from product costs determined using ABC? Which allocation system would you recommend? Why? Exhibit 1 Activity Cost Pool Machine setups Purchase orders General factory Totals Estimated Overhead Costs $13,570 91,520 25,800 $130,890 Product C 100 810 280 Expected Activity Product D 130 1,270 1,440 Total 230 2,080 1,720Step by Step Solution
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