Calculate the cost of 1000 units of bunkka-22 using the

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Mathias Company manufactures a number of specialized machine parts. Part Bunkka-22 uses $35 of direct materials and $15 of direct labor per unit.

Mathias' estimates manufacturing overhead is as follows:

Materials handling	$100,000
Machining	200,000
Factory supervision	150,000
Total	$450,000

Overhead is applied based on direct labor costs, which were estimated at $200,000.

Mathias is considering adopting activity-based costing. The cost drivers are estimated at:

Activity	Cost Driver	Expected Use
Materials Handling	Weight of materials	50,000 pounds
Machining	Machine hours	20,000 hours
Factory supervision	Direct labor hours	12,000 hours

Compute the cost of 1,000 units of Bunkka-22 using the current traditional costing system.
Compute the cost of 1,000 units of Bunkka-22 using the proposed activity-based costing system. Assume the 1,000 units use 2,500 pounds of materials, 500 machine hours, and 1,000 direct labor hours.

Reference no: EM13452570

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