Reference no: EM131796451

Exercise

Kowalski Company manufactures a number of specialized machine parts. Part Compo-24 uses $35 of direct materials and $15 of direct labor per unit. Kowalski's estimated manufacturing overhead is as follows.

Materials handling	$150,000
Machining	180,000
Factory supervision	138,000
Total	$468,000

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

Kowalski 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 Compo-24 using the current traditional costing system.