Traditional Product Costing Versus Activity-Based Costing

Assume that Panasonic Company has determined its estimated total manufacturing overhead cost for one of its plants to be $1,272,800 consisting of the following activity cost pools for the current month:

Activity Centers Activity Costs Cost Drivers Activity Level

Assembly setups $264,000 Setup hours 2,200

Materials handling 129,600 Number of moves 600

Assembly 720,000 Assembly hours 18,000

Maintenance 159,200 Maintenance hours 1,990

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Total $1,272,800

Total direct labor hours used during the month were 14,800. Panasonic produces many different electronic products, including the following two products produced during the current month:

Model X301 Model Z205

Units produced 3,000 3,000

Direct material costs $32,000 $32,000

Direct labor costs $27,000 $27,000

Direct labor hours 700 700

Setup hours 60 120

Materials moves 30 60

Assembly hours 900 900

Maintenance hours 20 80

(a) Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products. Round answers for unit cost to two decimal places, if applicable.

X301 Z205

Direct materials $_______ $______

Direct labor $_______ $_______

Overhead $_______ $_______

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Total cost $________ $________

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Units __________ _______

Unit cost $_________ $_________

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(b) Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.

Round answers for unit cost to two decimal places, if applicable

X301 Z205

Total direct material costs $_____ $______

Total direct labor costs $_____ $______

Overhead costs:

Assembly setup $______ $_______

Materals handling $_______ $_______

Assembly $_______ $______

Maintenance $________ $_______

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Total Costs $________ $_________

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Units produced _________ ________

Unit cost $_________ $_______

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