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Lovelace Company produces only two products: reading glasses and sunglasses. The company uses a normal cost system and overhead costs are currently allocated using a

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Lovelace Company produces only two products: reading glasses and sunglasses. The company uses a normal cost system and overhead costs are currently allocated using a plant-wide overhead rate based on direct labor hours. Outside cost consultants have recommended that the company use activity-based costing to charge overhead to products. The company expects to produce 4,000 reading glasses and 8,000 sunglasses this year. Each pair of reading glasses requires two direct labor hours to produce and each pair of sunglasses requires one-half hour to produce. The direct material and direct labor costs per unit are as follows: Estimated total factory overhead data for the year is as follows: 1. Calculate the total product cost per unit of each product using a plant-wide rate based on direct labor hours: Reading glasses__________ Sunglasses__________2. Calculate the activity cost rates for the following activities: Setups_________ Material handing___________ Packaging and shipping__________ 3. Calculate the total product cost per unit of each product using activity-based costing: Reading glasses_______ Sunglasses________

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