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Torri Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct
Torri Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHS). The company has two products, B40W and C63), about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production (units) B40W C63) $ 34.90 $ 63.70 $ 20.80 $ 62.40 0.80 2.40 35,000 15,000 The company's estimated total manufacturing overhead for the year is $2,656,000 and the company's estimated total direct labor-hours for the year is 64,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Assembling products (DLHS) Preparing batches (batches) Milling (MHS) Total Estimated Overhead Cost $1,216,000 480,000 960,000 $2,656,000 B40W C63) Total 28,000 36,000 64,000 Activities Assembling products Preparing batches Milling 2,304 1,088 2,496 2,112 4,800 3,200 Required: a. Determine the unit product cost of each of the company's two products under the traditional costing system. b. Determine the unit product cost of each of the company's two products under activity-based costing system. Essay Toolbar navigation B I US E
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