, Computing Product Costs Using Activity-Based Costing. Stillwater Company identified the following activities, estimated costs for each activity, and identified cost drivers for each activity for this coming year. (These are the first three steps of activity-based costing.)

The company produces three products, Z1, Z2, and Z3. Information about these products for the month of January follows:

Actual cost driver activity levels for the month of January are as follows:

Required:

1. Using the estimates for the year, compute the predetermined overhead rate for each activity (this is step 4 of the activity-based costing process).
2. Using the activity rates calculated in requirement a and the actual cost driver activity levels shown for January, allocate overhead to the three products for the month of January (this is step 5 of the activity-based costing process).
3. For each product, calculate the overhead cost per unit for the month of January. Round results to the nearest cent.
4. For each product, calculate the product cost per unit for the month of January. Round results to the nearest cent.

Required:

1. Prepare T-accounts for raw materials inventory, work-in-process inventory, finished goods inventory, manufacturing overhead, and cost of goods sold. Enter the beginning balances for the inventory accounts. (Manufacturing overhead and cost of goods sold are temporary accounts and thus do not have a beginning balance.)
2. Prepare a journal entry for each transaction from 1 through 14, and where appropriate, post each entry to the T-accounts set up in requirement
3. Based on the balance in the manufacturing overhead account prepared in requirement b, prepare a journal entry to close the manufacturing overhead account to cost of goods sold.