Altima Company uses an overhead costing system based on direct labor hours for its two products X and Y. The company is considering adopting an activity-based costing system, and collects the following information for the month of October.

	Product X	Product Y
Production units	20,000	2,000
Direct materials cost per unit	$50.00	$40.00
Direct labor cost per hour	$10.00	$10.00
Direct labor hours	34,000	6,000

			Activity Consumption
Overhead Cost pool	Overhead cost	Total activity	Product X	Product Y
Machine setup	$60,000	1,000 setups	300	700
Engineering change order	40,000	100 orders	20	80
Facility rent	90,000	1,000 sq. feet	300	700

Required:

(1) Compute the unit manufacturing cost of each product under a volume-based costing system based on direct labor hours. Show all necessary calculations.

(2) Compute the unit manufacturing cost of each product under the activity-based costing system. Show all necessary calculations.

Answer rating: 100% (QA)

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