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Traditional Product Costing versus Activity$-$Based Costing

Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year:

Overhead Item Expected Costs Cost Driver Maximum Quantity

Setup costs $$175,000$ Number of setups $1,750$

Ordering costs $120,000$ Number of orders $15,000$

Assembly $910,000$ Number of machine hours $14,000$

Finishing $208,000$ Number of direct labor hours $104,000$

The following data are for two recently completed jobs:

Job $201$ Job $202$

Cost of direct materials $$12,000$ $$14,000$

Cost of direct labor $$20,500$ $$40,000$

Number of units completed $1,000850$

Number of setups $1518$

Number of orders $200100$

Number of machine hours $200225$

Number of direct labor hours $8201,600$

a$.$ Determine the unit cost for each job using a traditional plantwide overhead rate based on machine hours.

Round cost per unit answers to two decimal places when applicable.

Job $201$ Job $202$

Direct materials

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Direct labor

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Overhead

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Total cost

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Units produced

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Cost per unit

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b$.$ Determine the unit cost for each job using ABC. Round cost per unit answers to two decimal places when applicable.

Job $201$ Job $202$

Direct materials

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Direct labor

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Setup cost

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Ordering costs

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Assembly

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Finishing

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Total job costs

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Units produced

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Cost per unit

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