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:

Over head item Expected Cost cost driver Maximum Quantity

setup cost $175,000 numbers of setup 1,750

ordering cost 120,000 numbers of order 15,000

Assembly 910,000 number of machine hour 14,000

Finishing 208,000 number of direct labour 104000

The following data are for two recently completed jobs:

Job 201 Job 2o2

cost of direct material $12,000 $14,000

cost of direct labour 20,500 40,000

number of unit completed 1,000 850

numbers of unit setups 15 18

numbers of order 200 100

numbers of machine 200 225

numbers of direct labor 820 1,600

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

Round cost per unit answers totwo decimal placeswhen applicable.

Job 201 Job 202

Direct materials answer

Direct labor Answer

Overhead Answer

Total cost Answer

Units produced Answer

Cost per unit

b. Determine the unit cost for each job using ABC. Round cost per unit answers totwo decimal placeswhen applicable.

Job 201 Job 202

Direct materials answer

Direct labor Answer

Setup cost Answer

Ordering costs Answer

Assembly Answer

Finishing Answer

Total job costs Answer

Units produced Answer

Cost per unit