Reference no: EM132549603
Wetz 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, Q30V and S33B, about which it has provided the following data:
Q30V S33B
Direct materials per unit......................... $ 34.10 $52.70
Direct labor per unit.............................. $16.10 $39.19
Direct labor- hours per unit .................... $070 $1.70
Annual production................................ 30,000 10,000
The company's estimated total manufacturing overhead for the year is $1,527,600 and the company's estimated total direct labor-hours for the year is 38,000.
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)........................... $ 608,000
Preparing batches (batches).......................................... 1976,00
Axial milling(MHs)....................................................... 722,000
Total...................................................................... $1527,600
Q30V S33B Total
Assembling products...................................... 21,000 17,000 38,000
Preparing batches ........................................... 456 1520 1976
Axial milling .................................................... 570 874 1,444
Required:
Question a. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.
Question b. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.