Compare the estimated costs you calculate to existing standard unit costs (Exhibit 3) and the revised unit costs (Exhibit 4). What causes the different product costing methods to produce such different results?

  

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Exhibit 3 Standard Unit Costs Valves Pumps Flow Controllers Material $16.00 $20.00 $22.00 Direct labor 4.00 8.00 6.40 Overhead @ 439% ofdirect 17.56 35.12 28.10 labor $ Standard unit cost $37.56 $63.12 $56.50 Overhead Machine depreciation $270,000 Set-up labor 2,688 Receiving 20,000 Materials handling 200,000 Engineering 100,000 Packing and shipping 60,000 Maintenance 30,000 $682,688 Total run labor 9,725 hours x $16 = $155,600 682,688 Overhead rate 439% %3D 155,600 Exhibit 3 Standard Unit Costs Valves Pumps Flow Controllers Material $16.00 $20.00 $22.00 Direct labor 4.00 8.00 6.40 Overhead @ 439% ofdirect 17.56 35.12 28.10 labor $ Standard unit cost $37.56 $63.12 $56.50 Overhead Machine depreciation $270,000 Set-up labor 2,688 Receiving 20,000 Materials handling 200,000 Engineering 100,000 Packing and shipping 60,000 Maintenance 30,000 $682,688 Total run labor 9,725 hours x $16 = $155,600 682,688 Overhead rate 439% %3D 155,600

Answer rating: 100% (QA)

Exhibit 3 uses a single cost driver allocation method to allocate the overheads to the products It u... View the full answer