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Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: Deluxe Standard $ 61.00 $ 19.00 $ 49.00 $
Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: Deluxe Standard $ 61.00 $ 19.00 $ 49.00 $ 15.60 Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production 0.70 DLHS 1.40 DLHS 10,000 units units 50,000 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: $481,000 77,000 DLHS Estimated total manufacturing overhead Estimated total direct labor-hours Required: 1. Determine the unit product costs of the Deluxe and Standard products under the company's 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: Expected Activity Estimated Overhead Activity Cost Pools and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Total Cost Deluxe Standard $308,000 7,000 200 70,000 100 77,000 300 111,000 62,000 Safety testing (tests) 30 70 100 $481,000 Total manufacturing overhead cost
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