Reference no: EM132742334

Question - DFC Inc. has budgeted manufacturing overhead costs of $2,470,000. It has allocated overhead on a plant-wide basis to its two products (Soft Wood and Hard Wood) using machine hours, which are estimated to be 109,000 for the current year. The company has decided to experiment with activity based costing and has created five activity cost pools and related activity cost drivers as follows:

Activity Centre	Cost Driver	Estimated Overhead	Expected Activity
Material Handling	Number of moves	$240,000	29,000 moves
Purchase Orders	Number of orders	$135,000	3,850 orders
Product Testing	Number of tests	$340,000	7,250 tests
Machine Set-up	Number of set-ups	$420,000	6,700 set-ups
Machining	Machine hours	$740,000	75,500 machine hours

Each unit of the products requires the following:

	Soft Wood	Hard Wood
Direct Material Costs	$270	$195
Direct Labour Costs	$150	$55
Purchase Orders	3	4
Machine Set-up	2	7
Product Testing	5	7
Machining	40	60
Material Handling	5	6

Required -

1. Under traditional costing using machine hours, calculate the total manufacturing cost per unit of both products.

2. Calculate the total manufacturing cost per unit for both products under ABC.