Traditional Product Costing versus Activity-Based Costing

Ridgeland 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 $1,224,000 Number of setups 7,200 Ordering costs 325,000 Number of orders 65,000 Maintenance 2,300,000 Number of machine hours 80,000 Power 220,000 Number of kilowatt hours 440,000

Total predicted direct labor hours for next year is 52,000. The following data are for two recently completed jobs:

Job 201 Job 202 Cost of direct materials

$15,500 $17,000 Cost of direct labor

$23,600 $67,300 Number of units completed

1,250 1,100 Number of direct labor hours

220 280 Number of setups

15 19 Number of orders

21 42 Number of machine hours

460 360 Number of kilowatt hours

200 300

a. Determine the unit cost for each job using a traditional plantwide overhead rate based on direct labor hours.

Round cost per unit answers to two decimal places when applicable.

Job 201 Job 202 Direct materials $Answer

$Answer

Direct labor Answer

Answer

Overhead Answer

Answer

Total cost $Answer

$Answer

Units produced Answer

Answer

Cost per unit $Answer

$Answer

b. Determine the unit cost for each job using ABC. Round cost per unit answers to two decimal places when applicable.

Job 201 Job 202 Direct materials $Answer

$Answer

Direct labor Answer

Answer

Setup cost Answer

Answer

Ordering costs Answer

Answer

Maintenance costs Answer

Answer

Power Answer

Answer

Total job costs $Answer

$Answer

Units produced Answer

Answer

Cost per unit$Answer

$Answer