Question
Upton Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct
Upton Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, Long and Short, about which it has provided the following data: Long Short Direct materials per unit $ 14.70 $ 48.50 Direct labor per unit $ 17.30 $ 50.90 Direct labor-hours per unit 0.70 2.10 Annual production 60,000 10,000 The company's estimated total manufacturing overhead for the year is $3,486,420 and the company's estimated total direct labor-hours for the year is 63,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Estimated Overhead Cost Direct labor support (DLHs) $ 2,034,020 Setting up machines (setups) 434,400 Part administration (part types) 1,018,000 Total $ 3,486,420 Expected Activity Long Short Total DLHs 42,000 21,000 63,000 Setups 1,190 1,750 2,940 Part types 950 2,710 3,660 The unit product cost of product Long under the company's traditional costing system is closest to: $54.60. $70.74. $67.80. $32.00.
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