Seats On Chairs (SOC) manufactures funky chairs. SOC has identified various activity centres to which overhead costs are assigned. The cost pools for these centres and their selected cost drivers for 2020 are as follows:

Activity Centres Cost Pools

Utilities $278,000

Scheduling and setup $260,000

Materials handling $640,000

Total overhead $1,178,000

SOCs products and other operating statistics follow:

Metaz Chair Yak Chair Latko Chair

Direct costs $80,000 $80,000 $90,000

Machine hours 30,000 10,000 20,000

Number of setups 130 380 270

Pounds of materials 500,000 300,000 800,000

Number of units produced 40,000 20,000 60,000

Direct labour hours 40,000 20,000 60,000

Instructions

a) Determine unit product costs using traditional costing, using direct labour hours as the driver.

b) Determine unit product costs using the ABC method, using appropriate cost drivers for each product.

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