Kunkel Company makes two products and uses a conventional costing system in which a single plantwide...
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Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow: Mercon Direct materials cost per unit $ 10.00 Wurcon $ 8.00 Direct labor cost per unit Direct labor-hours per unit Number of units produced $ 4.00 0.20 5,000 $ 5.00 3.90 10,000 These products are customized to some degree for specific customers. Required: 1. The company's manufacturing overhead costs for the year are expected to be $1,200,000. Using the company's conventional costing system, compute the unit product costs for the two products. 2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-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: Engineering design time (in hours) Mercon 4,000 Wurcon 4,000 Total 8,000 Compute the unit product costs for the two products using the proposed ABC system. (For all requirements, do not round intermediate calculations. Round your final answers to 2 decimal places.) 1. Unit product cost under conventional system 2. Unit product cost under ABC system Mercon Wurcon Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow: Mercon Direct materials cost per unit $ 10.00 Wurcon $ 8.00 Direct labor cost per unit Direct labor-hours per unit Number of units produced $ 4.00 0.20 5,000 $ 5.00 3.90 10,000 These products are customized to some degree for specific customers. Required: 1. The company's manufacturing overhead costs for the year are expected to be $1,200,000. Using the company's conventional costing system, compute the unit product costs for the two products. 2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-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: Engineering design time (in hours) Mercon 4,000 Wurcon 4,000 Total 8,000 Compute the unit product costs for the two products using the proposed ABC system. (For all requirements, do not round intermediate calculations. Round your final answers to 2 decimal places.) 1. Unit product cost under conventional system 2. Unit product cost under ABC system Mercon Wurcon
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1 Unit Product Cost under Conventional Costing System To calculate the unit product cost under the conventional costing system we need to determine the predetermined overhead rate based on direct labo... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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