Requird:

1- What is the expected total cost of products (X,Y and Z) if traditional cost accounting is used?

2- What is the expected total cost of products (X,Y and Z) if activity-based costing is used?

Company B is currently applying manufacturing overhead based on budgeted direct labor hours. Budgeted direct labor hours for the year is 50,000. The company is thinking of using Activity based Costing system and has identifies four activities. The four activities, cost drivers, annual activity level, and expected overhead costs for each activity for the year are listed below. Activity Maintenance Materials Handling Setups Inspection Annual Cost-Driver Cost Driver Activity Level Machine hours 50,000 Material moves 8,000 Setups 6,000 Quality inspections 20,000 Total Budgeted MOH Expected MOH ($) 400,000 200,000 300,000 100,000 1,000,000 Annual estimates for three of the products sold by the company are as follows: Product X Product Y Product z Total sales ($) $200,000 $200,000 $200,000 Direct materials $50,000 $30,000 $40,000 Direct labor cost $45,000 $25,500 $35,000 Direct labor hours 4,500 2,550 3,500 Number of materials moves 350 250 300 Number of inspections 350 200 300 Number of setups 150 80 120 Number of machine hours 8000 4000 6000