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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 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 halfhour 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 $ in manufacturing overhead costs and produce
units of Product W and units of Product S during the current year. Unit cost for
materials and direct labour are: Direct Materials Product $ Direct Material Product W $ Direct Labour Product S $ Direct Labour Product W$
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 $ Expected Activity for
Product and Product for total activity
Purchase orders issues: Estimated Overhead Costs $ Expected Activity for Product
and Product for total activity
Machinehours requited: Estimated Overhead Costs $ Expected Activity for Product
and Product for total activity
Purchase orders issues: Estimated Overhead Costs $ Expected Activity for Product S
and Product for total activity of
Machinehours requited: Estimated Overhead Costs $ Expected Activity for Product
and Product for total activity of
Maintenance requested issued: Estimated Overhead Costs $ Expected Activity for
Product and Product for total activity of
Using the data above and an activitybased costing approach, determine the unit product cost
of each product for the current year.
c What product is being underover costed in the Traditional method?
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