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Demonstrate the manufacturing overhead cost per unit

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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.

Reference no: EM132549603

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