Werger Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its...
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Werger Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, W82R and L48S, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production (units) The company's estimated total manufacturing overhead for the year is $2,663,222 and the company's estimated total direct labor- hours for the year is 85,100. Activities and Activity Measures Supporting direct labor (DLHS) Setting up machines (setups) Parts administration (part types) Total The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities Supporting direct labor Setting up machines Parts administration W82R $ 21.90 $ 18.80 0.70 36, 200 W82R 25,340 839 1,750 L48S $ 57.40 $ 64.60 2.40 24,900 Estimated Overhead Cost $ 595,700 865,062 1,202,460 $ 2,663,222 L48S 59,760 3,530 1,190 Total 85,100 4,369 2,940 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. Werger Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, W82R and L48S, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production (units) The company's estimated total manufacturing overhead for the year is $2,663,222 and the company's estimated total direct labor- hours for the year is 85,100. Activities and Activity Measures Supporting direct labor (DLHS) Setting up machines (setups) Parts administration (part types) Total The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities Supporting direct labor Setting up machines Parts administration W82R $ 21.90 $ 18.80 0.70 36, 200 W82R 25,340 839 1,750 L48S $ 57.40 $ 64.60 2.40 24,900 Estimated Overhead Cost $ 595,700 865,062 1,202,460 $ 2,663,222 L48S 59,760 3,530 1,190 Total 85,100 4,369 2,940 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.
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a Unit product cost under the traditional costing system To calculate the unit product cost using the traditional costing system we need to determine the predetermined overhead rate based on direct la... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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