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Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the companys two product lines appear below: Deluxe Standard Direct materials per unit $ 56.00 $

Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the companys two product lines appear below:

Deluxe Standard
Direct materials per unit $ 56.00 $ 44.00
Direct labor per unit $ 14.00 $ 11.60
Direct labor-hours per unit 0.70 DLHs 1.40 DLHs
Estimated annual production 10,000 units 50,000 units

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Estimated total manufacturing overhead $ 538,000
Estimated total direct labor-hours 77,000 DLHs

Required:

1. Determine the unit product costs of the Deluxe and Standard products under the companys traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools:

Activity Cost Pools (and Activity Measures) Estimated Overhead Cost Expected Activity
Deluxe Standard Total
Supporting direct labor (direct labor-hours) $ 385,000 7,000 70,000 77,000
Batch setups (setups) 96,000 200 100 300
Safety testing (tests) 57,000 30 70 100
Total manufacturing overhead cost $ 538,000

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