Reference no: EM132524074
Texas Manufacturing Corporation 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, W82R and L48S, about which it has provided the following data:
Determine the unit product cost of each of the company's two products under the traditional costing system.
W82 RL48S
Direct Material per Unit $11.50 $ 62.90
Direct Labour per Unit $2.00 $13.00
Direct Labout Hours per unit 0.2 1.3
Annual Production 45,000 10,000
The Company's estimated total manufacturing overhead for the year is $1,521,960 and the company's estimated total direct labour-hours for the year is 22,000.
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 W82 RL48S Total
Support direct labour 9,000 13,000 22,000
Setting up Machines 814 374 1,188
Parts Administration 924 1,012 1,936
Activities & Drivers Estimated OH Cost
Support 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.
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