10.

value: 5.78 points

Exercise 3-7 Contrast ABC and Conventional Product Costs [LO2, LO3, LO4]

Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:

	Mercon		Wurcon
Direct materials cost per unit	$	13.60	$	22.10
Direct labor cost per unit	$	6.40	$	2.70
Direct labor-hours per unit		0.44		0.27
Number of units produced		13,000		77,000

These products are customized to some degree for specific customers.

Required:
1.	The company's manufacturing overhead costs for the year are expected to be $630,938. Using the company's conventional costing system, compute the unit product costs for the two products. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)

	Mercon	Wurcon
Unit product cost	$	$

2.

Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:

	Mercon	Wurcon	Total
Engineering design time (in hours)	3,100	2,200	5,300

Compute the unit product costs for the two products using the proposed ABC system. (Round your final answers to 2 decimal places.)

	Mercon	Wurcon
Unit product cost	$	$

rev: 02_05_2013_QC_26221

References

Worksheet

10 578 points Exercise 3-7 Contrast ABC and Conventional Product Costs CLO2, LO3, LO4] Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow: Mercon Wurcon Direct materials cost per unit 13.60 22.10 Direct labor cost per unit 6.40 2.70 Direct labor-hours per unit 0.44 0.27 13.000 77,000 Number of units produced These products are customized to some degree for specific customers. Required 1. The company's manufacturing overhead costs for the year are expected to be 5030.938. Using the company's conventional costing system, compute the unit product costs for the two products. (Do not round intermediate calculation. Round your final answers to 2 decimal places.) Mercon Wurcon Unit product cost S 30.47 31.23 2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year: Mercon Wurcon Total Engineering design time (in hours 3,100 2,200 5,300 Compute the unit product costs for the two products using the proposed ABC system. (Round your final answers to 2 decimal places.) Mercon Wurcon Unit product cost