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Overview and Exercises 0 Seved Help Save & Che Exercise 2A-3 (Algo) Activity-Based Absorption Costing as an Alternative to Traditional Product Costing [LO2-5) Stillicum Corporation

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Overview and Exercises 0 Seved Help Save & Che Exercise 2A-3 (Algo) Activity-Based Absorption Costing as an Alternative to Traditional Product Costing [LO2-5) Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: Direct materials per unit Direct l'abor per unit Direct labor-hours per unit Estimated annual production Deluxe $59.00 $ 17.00 0.70 DLR 10,000 unita Standard $ 47.00 $ 14.00 1.40 DLRS 50,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below. Estimated total manufacturing overhead Tatimated total direct labor-hours $627.000 77.000 LBS Required: 1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools Expected Activity Estimated Overhead Activity Cost Pools and Activity Measures) cost Deluxe Total Supporting direct labor direct labor-hours) $ 462.000 7,000 70,000 77,000 Standard

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