Question
Koszyk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct
Koszyk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labour-hours (DLHs). The company has two products, P85G and C43S, about which it has provided the following data:
P85G | C43S | |
Direct materials per unit | $36.50 | $63.10 |
Direct labour per unit | $20.80 | $31.20 |
Direct labour hours per unit | 0.80 | 1.20 |
Annual production | 35,000 | 10,000 |
The company's estimated total manufacturing overhead for the year is $2,264,000 and the company's estimated total direct labour-hours for the year is 40,000. The company is considering using a variation of activity-based costing to determine its unit product costs for externalreports. Data for this proposed activity-based costing system appear below:
Activities and Activity Measures | Estimated Overhead Cost |
Supporting direct labour (DLHs) | $1,160,000 |
Setting up machines (setups) | 288,000 |
Parts administration (part types) | 816,000 |
Total | $2,264,000 |
Expected Activity | |||
P85G | C43S | Total | |
DLHs | 28,000 | 12,000 | 40,000 |
Setups | 1,480 | 920 | 2,400 |
Part types | 1,880 | 840 | 2,720 |
(Appendix 7A) The total cost of a unit of product P85G under the company's traditional costing system is closest to:
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