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Question 1 International Steel Company has budgeted manufacturing overhead costs of $1,932,000. It has allocated overhead on a plant-wide basis to its two products (soft
Question 1 International Steel Company has budgeted manufacturing overhead costs of $1,932,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hour year. The company has decided to experiment with activity-based costing and has created five activity cost pools and related activity cost drivers as follows: Activity Centre Cost Driver Estimated Overhead Estimated Activity Number of moves Material handling Purchase orders Product testing Machine set-up Machining Number of orders Number of tests $280,000 $102,000 $420,000 $320,000 $810,000 40,000 moves 1,200 orders 3,500 tests 5,000 set-ups 100,000 machine hours Number of set-ups Machine hours Each unit of the products requires the following: Soft Steel Hard Steel $200 Direct materials costs Direct labour costs $300 $120 $60 2 3 5 10 Purchase orders Machine set-up Product testing Machining Material handling 3 4 50 50 4 6 Under traditional product costing using machine hours, calculate the total manufacturing cost per unit of both products. (Round answers to 0 decimal places, e.g. 1525.) Under traditional product costing using machine hours, calculate the total manufacturing cost per unit of both products. (Round answers to o decimal places, e.g. 1525.) Soft Steel Hard Steel Total manufacturing cost per unit $ Under ABC, prepare a schedule showing the calculation of the activity-based overhead rates (per cost driver). (Round answers to 2 decimal places, e.g. 15.25.) Cost Pool Rate Cost Drivers Material handling per move $ Purchase orders per order $ Product testing $ per test Machine set-up per set-up $ Machining per machine hr $ Calculate the total manufacturing cost per unit for both products under ABC. (Round per cost driver to 2 decimal places. e.g. 25.25 and final answers to 0 decimal places, e.g. 1,525.) Soft Steel Hard Steel Total manufacturing cost per unit using ABC $
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