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Please pls help! Thank you! EMD Corporation manufactures two products, Product S and Product W . Product W is of fairly recent origin, having been

Please pls help! Thank you!
EMD Corporation manufactures two products, Product S and Product W. Product W is of fairly
recent origin, having been developed as an attempt to enter a market closely related to that
of Product S. Product W is the more complex of the two products, requiring one hour of direct
labour time per unit to manufacture, compared to a half-hour of direct labour time for
Product S. Product W is produced on an automated production line.
Overhead is currently assigned to the products on the basis of direct labour hours. The
company estimated it would incur $500,000 in manufacturing overhead costs and produce
10,000 units of Product W and 60,000 units of Product S during the current year. Unit cost for
materials and direct labour are: Direct Materials - Product S=$10 Direct Material - Product W = $24 Direct Labour - Product S = $8 Direct Labour - Product W=$12
Required:
a) Compute the predetermined overhead rate under the current (traditional) method of
allocation, and determine the unit product cost of each product for the current year.
b) The company's overhead costs can be attributed to four major activities. These activities
and the amount of overhead cost attributable to each for the current year are given below:
Machine setups required: Estimated Overhead Costs =$200,000 Expected Activity for
Product S=800 and Product W=!,200 for total activity of2,000
Purchase orders issues: Estimated Overhead Costs =$43,500 Expected Activity for Product S
=500 and Product W=100 for total activity of600
Machine-hours requited: Estimated Overhead Costs =$104,000 Expected Activity for Product
S=3,000 and Product W=10,000 for total activity of13,000
Purchase orders issues: Estimated Overhead Costs =$43,500 Expected Activity for Product S
=500 and Product W=100 for total activity of 600
Machine-hours requited: Estimated Overhead Costs =$104,000 Expected Activity for Product
S=3,000 and Product W=10,000 for total activity of 13,000
Maintenance requested issued: Estimated Overhead Costs =$152,500 Expected Activity for
Product S=860 and Product W=1,140 for total activity of 2,000
Using the data above and an activity-based costing approach, determine the unit product cost
of each product for the current year.
c) What product is being under/over costed in the Traditional method?
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