Reference no: EM132540393
Wyoming Manufacturing Limited has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labour-hours (DLHs). The company has two products, Widgets and Trinkets, about which it has provided the following data:
Widgets Trinkets
Direct Materials per unit $11.25 $62.70
Direct Labour per unit $2.00 $12.00
Direct labour hours per unit 0.20 1.20
Annual production 45,000 10,000
The firm's estimated total manufacturing overhead for the year is $1,521,960 and the firm's estimated total direct labour-hours for the year is 21,000.
The company is considering using activity-based costing to determine its unit product costs. Data for this proposed activity-based costing system appear below:
Activities Widgets Trinkets Total
Supporting direct labour 9,000 12,000 21,000
Setting up machines 814 374 1,188
Parts administration 924 1,012 1,936
Activities & Drivers
Estimated MOH cost
Supporting direct labour (DLH) $352,000
Setting up machines (setups) $201,960
Parts Administration (part types) $968,000
Total $1,521,960
Question 1: Determine the unit product cost of each of the company's two products under the traditional costing system.
Question 2: Determine the unit product cost of each of the company's two products under activity-based costing system.