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The St. John's Company manufactures three types of products: Product A, Product B, and Product C. The company has always used a traditional cost system,
The St. John's Company manufactures three types of products: Product A, Product B, and Product C. The company has always used a traditional cost system, using a single plantwide rate with direct labor hours as the allocation base used to charge manufacturing overhead to production. Recently the company companies who are charging lower prices for smilar products. The company has decided to implement an activity based costing system, and after performing the appropriate analysis, has determined that the attached activities and cost drivers relate to their production process. has found its market very competitive and has starting losing market share to Also attached is the company's budgeted usage of the various cost drivers required. In addition, the company has prepared its manufacturing overhead budget for the upcoming year, which has also been attached. The average direct labor rate is $10 per hour REQUIRED: (1) Prepare a schedule which shows the budgeted total cost and budgeted cost per unit for each product, assuming that the company continues to use its current traditional costing system. Round the budgeted manufacturing overhead rate(s) to five decimal places, round all dollar amounts calculated to the nearest whole dollar, and round the cost per unit to the nearest cent Prepare a schedule which showsthe budgeted total cost and budgeted cost per unit for each product, assuming that the company changes to an activity based costing system with the cost drivers indicated. Round the budgeted manufacturing overhead rate(s) to five decimal places, round all dollar amounts calculated to the nearest whole dollar, and round the cost per unit to the nearest cent (2)
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