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 $954,600 consisting of the following activity cost pools for the current month:

Activity CentersActivity CostsCost DriversActivity LevelAssembly setups$ 198,000Setup hours2,000Materials handling97,200Number of moves600Assembly540,000Assembly hours18,000Maintenance119,400Maintenance hours1,990Total$954,600

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 X301Model Z205Units produced2,5002,500Direct materials costs$29,000$29,000Direct labor costs$24,000$24,000Direct labor hours700700Setup hours60120Materials moves3060Assembly hours900900Maintenance hours2080

Required

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 totwo decimal places, if applicable.

X301Z205Direct materials

Direct labor

Overhead

Total cost

Units

Unit cost

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 totwo decimal places, if applicable.

X301Z205Total direct materials costs

Total direct labor costs

Overhead costs:Assembly setup

Materials handling

Assembly

Maintenance

Total costs

Units produced

Unit cost