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Question - Traditional Product Costing Versus Activity-Based Costing - Assume that Panasonic Company has determined its estimated total manufacturing overhead cost for one of its plants to be $204,000, consisting of the following activity cost pools for the current month:
Activity Centers
Activity Costs
Cost Drivers
Activity Level
Assembly setups
$45,000
Setup hours
1,500
Materials handling
15,000
Number of moves
300
Assembly
120,000
Assembly hours
12,000
Maintenance
24,000
Maintenance hours
1,200
Total
$204,000
Total direct labor hours used during the month were 8,000. Panasonic produces many different electronic products, including the following two products produced during the current month:
Model X301
Model Z205
Units produced
1,000
Direct materials costs
$15,000
Direct labor costs
$12,500
Direct labor hours
500
50
100
Materials moves
25
800
10
40
Required -
a. Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products.
b. Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.
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