Problem $13-24($Algo$)$ Activity$-$based costing versus traditional overhead allocation methods LO $13-9$

Woodland Industries manufactures and sells custom$-$made windows. Its job costing system was designed using an activity$-$based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers $($activities$).$ Assume that the direct labor rate is $$18$ per hour and that there were no beginning inventories. The following information was available for $2022,$ based on an expected production level of $51,700$ units for the year, which will require $206,800$ direct labor hours:

Activity Cost Driver Budgeted Costs for $2022$ Cost Driver Used as Allocation Base Cost Allocation Rate

Materials handling $ $232,650$ Number of parts used $ $0\mathrm{.}18$ per part

Cutting and lathe work $1,938,750$ Number of parts used $3\mathrm{.}20$ per part

Assembly and inspection $4,549,600$ Direct labor hours $22\mathrm{.}00$ per hour

The following production, costs, and activities occurred during the month of July:

Units Produced Direct Materials Costs Number of Parts Used Direct Labor Hours

$4,250$ $ $159,80093,50017,850$

Required:

Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July $($using the activity$-$based costing approach$).$

Note: Round "Cost per unit produced" to $2$ decimal places. Do not round intermediate calculations.

Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis $($rather than using the activity$-$based costing system previously described$).$ Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. $($Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for $2022.)$

Note: Round "Cost per unit produced" to $2$ decimal places. Do not round intermediate calculations.

Which approach do you think provides better information for manufacturing managers?