Traditional Product Costing versus Activity-Based Costing

Ridgeland Inc. makes backpacks for large sporting goods chain that are sold under the customers' store brand name. The Accounting Department has identified the following overhead costs and cost drivers for the next year:

Total predicted direct labor hours for the next year is 26,000. The following data are for two recently completed jobs:

Traditional Product Costing versus Activity-Based Costing Ridgeland Inc. makes backpacks for large sporting goods chain that are sold under the customers' store brand name. The Accounting Department has identified the following overhead costs and cost drivers for the next year. Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $244,800 Number of setups 7,200 Ordering costs $65,000 Number of orders 65,000 Maintenance $460,000 Number machine hours 80,000 Power $44,000 Number of kilowatt hours 440,000 Total predicted direct labor hours for the next year is 26,000. The following data are for two recently completed jobs: Job 201 Job 202 Cost of direct materials 58,000 59,500 Cost of direct labor $16,100 $59, 800 Number of unite completed 800 650 Number of direct labor hours 220 270 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 plant wide overhead rate based on direct labor hours. (Round cost per unit answers to two decimal places when applicable.) Job 20 Job 202 Direct materials S Direct labor Overhead Total cost Units produced Cost perunit 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 S S Direct labo Setup cost Ordering costs Maintenance costs Power Total job costs 5 Units produced Cost per unit