Question
Werger Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct
Werger 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, W82R and L48S, about which it has provided the following data:
W82R | L48S | |
---|---|---|
Direct materials per unit | $ 21.40 | $ 58.90 |
Direct labor per unit | $ 21.40 | $ 58.80 |
Direct labor-hours per unit | 0.70 | 2.40 |
Annual production (units) | 32,100 | 15,900 |
The company's estimated total manufacturing overhead for the year is $2,514,630 and the company's estimated total direct labor-hours for the year is 60,630.
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 |
---|---|
Supporting direct labor (DLHs) | $ 424,410 |
Setting up machines (setups) | 622,920 |
Parts administration (part types) | 1,467,300 |
Total | $ 2,514,630 |
Activities | W82R | L48S | Total |
---|---|---|---|
Supporting direct labor | 22,470 | 38,160 | 60,630 |
Setting up machines | 830 | 2,650 | 3,480 |
Parts administration | 1,680 | 1,970 | 3,650 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started