Product in traditional costing system

Product in traditional costing system - bullie manufacturing

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Reference no: EM13646479

Bullie 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, D31X and U75X, about which it has provided the following data:

	D31X	U75X
Direct materials per unit...........	$29.20	$47.40
Direct labor per unit.................	$1.10	$23.10
Direct labor-hours per unit.......	0.10	2.10
Annual production...................	35,000	15,000

The company's estimated total manufacturing overhead for the year is $1,147,650 and the company's estimated total direct labor-hours for the year is 35,000.

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)........	$ 140,000
	Preparing batches (batches)...........	241,150
	Axial milling (MHs).......................	766,500
	Total...............................................	$1,147,650

	D31X	U75X	Total
Assembling products.........	3,500	31,500	35,000
Preparing batches...............	560	1,295	1,855
Axial milling......................	1,540	1,015	2,555

Required:

a. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.

b. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.

Reference no: EM13646479

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