Companys traditional costing system

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Reference no: EM13646342

Use the following to answer questions:

Binegar Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, R58G and R09O, about which it has provided the following data:

	R58G	R09O
Direct materials per unit...........	$15.90	$52.40
Direct labor per unit.................	$1.30	$27.30
Direct labor-hours per unit.......	0.10	2.10
Annual production...................	30,000	10,000

The company's estimated total manufacturing overhead for the year is $1,617,600 and the company's estimated total direct labor-hours for the year is 24,000.

The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

	Activities and Activity Measures	Estimated Overhead Cost
	Assembling products (DLHs)...............	$ 696,000
	Preparing batches (batches)..................	252,000
	Product support (product variations)....	669,600
	Total......................................................	$1,617,600

	Expected Activity
	R58G	R09O	Total
DLHs...........................	3,000	21,000	24,000
Batches........................	528	1,152	1,680
Product variations........	1,056	1,176	2,232

1. The manufacturing overhead that would be applied to a unit of product R58G under the company's traditional costing system is closest to:

A) $6.74

B) $16.10

C) $22.84

D) $2.90

2. The manufacturing overhead that would be applied to a unit of product R09O under the activity-based costing system is closest to:

A) $113.46

B) $255.00

C) $141.54

D) $17.28

Reference no: EM13646342

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