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Traditional Product Costing Versus Activity-Based Costing High Country Outfitters, Inc., makes backpacks for large sporting goods chains that are sold under the customers' store brand
Traditional Product Costing Versus Activity-Based Costing High Country Outfitters, Inc., makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The accounting department has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $828,000 Number of setups 7,200 Ordering costs 252,000 Number of orders 60,000 Maintenance 1,360,000 Number of machine hours 80,000 Power 210,000 Number of kilowatt hours 600,000 Total predicted direct labor hours for next year is 60,000. The following data are for two recently completed jobs: Job 201 Job 202 $13,500 $15,000 $19,125 $71,250 1,125 915 Cost of direct materials Cost of direct labor Number of units completed Number of direct labor hours Number of setups Number of orders 270 330 18 22 24 45 Number of machine hours 540 450 Number of kilowatt hours 270 360 a. Determine the unit cost for each job using a traditional company-wide overhead rate based on direct labor hours. Round rate to two decimal places. Overhead rate per direct labor hour $ 136.55 X Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed. Job 201 Job 202 ron 10000 Direct materials $ Direct labor Overhead Total job cost Units Job 201 13,500 $ 19,125 11,445.3 x 44,070.3 x Job 202 15,000 71,250 10,495 x 96,745 x 915 1,125 Per unit cost $ 39.17 x $ 105.73 x b. Determine the unit cost for each job using ABC. Activity-based overhad rates: Round answers to two decimal places, when needed. vern Judra 115 4.2 Setup costs $ Ordering costs $ Maintenance costs $ Power $ 17 0.35 NOTE: Round all answers (except cost per unit) to the nearest whole number, when applicable. Round cost per unit answers to two decimal places. Job 201 Job 202 Direct materials $ 13,500 $ 15,000 Direct labor 19,125 71,250 Overhead Setup cost 2,070 2,530 Ordering costs 100.8 x 189 Maintenance costs 9,180 7,650 Power 94.5 x 126 Total job costs $ 44,070.3 X $ 96,745 Units produced 1,125 915 Cost per unit $ 39.17 $ 105.73
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