P2. Flyer Corporation manufactures two products, Product A and Product B. Product B is the more...

 

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P2. Flyer Corporation manufactures two products, Product A and Product B. Product B is the more complex of the two products, requiring two hours of direct labor time per unit to manufacture compared to one hour of direct labor time for Product A. Overhead is currently assigned to the products on the basis of direct labor-hours. The company estimated it would incur $396,000 in manufacturing overhead costs and produce 5,500 units of Product B and 22,000 units of Product A during the current year. Unit costs for materials and direct labor are: Direct material..... Direct labor............ Product A Product B $9 $20 $7 $15 Required: a. Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year using the conventional method. b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Expected Activity Activity Cost Pools Machine setups required......... Purchase orders issued........... Machine-hours required.......... Maintenance requests issued Estimated Overhead Costs $170,000 37,000 91,000 98,000 $396,000 Product A 700 300 4,000 400 Product B 1,000 200 9,000 600 Total 1,700 500 13,000 1,000 Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year. P2. Flyer Corporation manufactures two products, Product A and Product B. Product B is the more complex of the two products, requiring two hours of direct labor time per unit to manufacture compared to one hour of direct labor time for Product A. Overhead is currently assigned to the products on the basis of direct labor-hours. The company estimated it would incur $396,000 in manufacturing overhead costs and produce 5,500 units of Product B and 22,000 units of Product A during the current year. Unit costs for materials and direct labor are: Direct material..... Direct labor............ Product A Product B $9 $20 $7 $15 Required: a. Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year using the conventional method. b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Expected Activity Activity Cost Pools Machine setups required......... Purchase orders issued........... Machine-hours required.......... Maintenance requests issued Estimated Overhead Costs $170,000 37,000 91,000 98,000 $396,000 Product A 700 300 4,000 400 Product B 1,000 200 9,000 600 Total 1,700 500 13,000 1,000 Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year.

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Calculation of Unit Product Cost Direct Material Direct Labor Manufacturing Overhead Total Cost Per ... View the full answer