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Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are
Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $18 per hour and that there were no beginning inventories. The following information was available for 2019 , based on an expected production level of 50,000 units for the year, which will require 200,000 direct labor hours: The following production, costs, and activities occurred during the month of July: Required: a. Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activitybased costing approach). (Round "Cost per unit produced" to 2 decimal places.) b. Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2019 .) (Round "Cost per unit produced" to 2 decimal places.) b. Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2019.) (Round "Cost per unit produced" to 2 decimal places.) c. Which approach do you think provides better information for manufacturing managers
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