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Compute the total unit cost of both products

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Reference no: EM132547740

Sony A. & Sons is a company located in the Virgin Islands that manufactures two types of DVD players, an Entertainment model and a Home model. The Entertainment model is a multi-format DVD player with Wi-Fi capability, and DST decoder. The home model's primary feature is progressive-scan. Annual production is 50,000 units for the Entertainment and 20,000 units for the Home.

The Home model requires 2 Hours of direct labor while the Entertainment Model requires 3 hours of direct labor for completion. Therefore, total annual direct labor hours are 190,000 hours. The predetermined overhead rate is $5.53 per direct labor hour. The direct materials cost per unit is $42 for the Entertainment model and $11 for the Home model. The direct labor cost is $9 per hour for both models.

The company's managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows.

Instructions: (all numbers should be rounded to two decimals)

Question 1: Under traditional product costing, compute the total unit cost of both products. Prepare a simple comparative schedule of the individual costs by product.

Question 2: Compute the total cost per unit for each product under ABC.

Question 3: Comment on (1) the comparative overhead cost per unit for the two products under ABC, and (2) the comparative total costs per unit under traditional costing and ABC.

Reference no: EM132547740

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