Question: Answer both questions for a and b Activity-based costing versus traditional overhead allocation methods LO 9 Woodland industries and sells custom-made windows. Its job costing
Activity-based costing versus traditional overhead allocation methods LO 9 Woodland industries and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $13 per hour and that there were no beginning inventories. The following information was available for 2015, based on an expected production level of 52, 800 units for the year, which will require 220,000 direct labor hour: The following production, costs, and activities occurred during the month of July: Required: Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July(using the activity-based costing approach). (Round "Cost per unit produced" to 2 decimal places.) Total manufacturing cost _____________ Cost per unit produced _____________ Assume instead that Wood and industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described.) Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Round "Cost per unit product" to 2 decimal places.) Total manufacturing cost _____________ Cost per unit produced _____________ Which approach do you think provides better information for manufacturing managers? Activity based costing Direct labor hours basis
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