Kayel, Inc., manufactures and sells two products: Product J and Product S.

Data concerning the expected production of each product and the expected total

direct labor-hours (DLHs) required to produce that output appear below:

Prod J

Prod S

Expected production

300

700

Direct labor hours per unit

9

12

The direct labor rate is $16.50 per DLH.

The direct materials cost per unit is as follows:

Prod J

Prod S

Direct material cost per unit.

$112.00

$100.80

The company has an activity based costing system with the following activity

cost pools, activity measures and expected activity:

Expected Activity

Activity Cost Pools

Activity Measures

Estimated Overhead

Prod J

Prod S

Total

Labor related

DLHs

$542,901.00

2,700

8,400

11,100

Machine setups

Setups

$20,244.00

400

300

700

General factory

MHs

$433,608.00

4,300

4,600

8,900

Total

$996,753.00

#1a - Calculate the predetermined overhead rate

#1b - Calculate the unit product cost

Estimated total manufacturing overhead

Prod J

Prod S

divided by

Direct material

given

Estimated total direct labor hours

Direct labor

hint: multiply hours per unit by DLH rate per hour

=

Manufacturing overhead

hint: multiply overhead rate per DLH by hours per unit

Predetermined overhead rate per DLH

Unit product cost

#2 - Calculate activity rates

Activity Cost Pool

Activity Measure

Estimated Overhead Cost ($)

divided by Expected TOTAL Activity

Activity Rate ($)

Labor related

DLHs

Machine setups

Setups

General factory

MHs

#3a - Calculate overhead by product and compute overhead cost per unit

Prod J

Prod S

Activity Cost Pool

Activity Rate ($)

Expected Activity

Estimated Overhead Cost ($)

Expected Activity

Estimated Overhead Cost ($)

Labor related

Machine setups

General factory

Total overhead cost

divided by units produced

Overhead cost per unit