Wyoming Manufacturing Limited has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on directlabour-hours (DLHs). The company has two products, Widgets and Trinkets, about which it has provided the following data:

WidgetsTrinkets

Direct Materials per unit $11.50 $62.90

Direct Labour per unit $2.00 $13.00

Direct labour hours per unit 0.20 1.30

Annual production 45,000 10,000

The firm's estimated total manufacturing overhead for the year is $1,521,960 and the firm's estimated total directlabour-hours for the year is 22,000.

The company is considering using activity-based costing to determine its unit product costs.Data for this proposed activity-based costing system appear below:

ActivitiesWidgets Trinkets Total

Supporting direct labour9,000 13,000 22,000

Setting up machines 814 374 1,188

Parts administration 924 1,012 1,936

more information include:

Activities & DriversEstimated MOH cost

Supporting direct labour (DLH) $352,000

Setting up machines (setups) $201,960

Parts Administration (part types) $968,000

Total $1,521,960

Required:

a.--- Determine the unit product cost of each of the company's two products under the traditional costing system.

b--- Determine the unit product cost of each of the company's two products under activity-based costing system.

c-----What are some of the advantages of the ABC model?

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