Please help me with the questions below Cosgrove Company manufactures two produc
ID: 2370812 • Letter: P
Question
Please help me with the questions below
Cosgrove Company manufactures two products, Product K-7 and Product L-15. Product L-15 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product K-7. Product L-15 is the more complex of the two products, requiring 2 hours of direct labor time per unit to manufacture compared to 1 hour of direct labor time for Product K-7. Product L-15 is produced on an automated production line.
Overhead currently is applied to the products on the basis of direct labor-hours. The company estimated it would incur $659,973 in manufacturing overhead costs and produce 14,600 units of Product L-15 and 58,400 units of Product K- 7 during the current year.
Compute the predetermined overhead rate under the current method. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Determine the unit product cost of each product for the current year. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)
The company is considering the use of activity-based costing as an alternative to its traditional costing method for manufacturing overhead. Data relating to the company's activity cost pools for the current year are given below:
Using the data above, determine the unit product cost of each product for the current year. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)
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Please help me with the questions below
Cosgrove Company manufactures two products, Product K-7 and Product L-15. Product L-15 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product K-7. Product L-15 is the more complex of the two products, requiring 2 hours of direct labor time per unit to manufacture compared to 1 hour of direct labor time for Product K-7. Product L-15 is produced on an automated production line.
Overhead currently is applied to the products on the basis of direct labor-hours. The company estimated it would incur $659,973 in manufacturing overhead costs and produce 14,600 units of Product L-15 and 58,400 units of Product K- 7 during the current year.
Explanation / Answer
Product margin $ $ $ ________________________________________ Requirement 2: The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs): Expected Activity Activities and Activity Measures Estimated Overhead cost Xtreme Pathfinder Total Supporting direct labor (direct labor-hours) $796,320 22,000 122,000 144,000 Batch setups (setups) 486,300 150 150 300 Product sustaining (number of products) 602,100 1 1 2 Other 376,080 NA NA NA Total manufacturing overhead cost $2,260,800 ________________________________________ Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system. (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.) Xtreme Pathfinder Total Product margin $ $ $ ________________________________________ Requirement 3: Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your percentage values to one decimal place and round all other values to the nearest whole number. Omit the "$" & "%" signs in your response.) Xtreme Pathfinder Total Traditional Cost System Amount % % Amount Direct materials $ % $ % $ Direct labor % % Manufacturing overhead % % Total cost assigned to products $ $ $ Activity-Based Costing System Direct costs: Direct materials $ % $ % $ Direct labor % % Indirect costs: Supporting direct labor % % Batch setups % % Product sustaining % % Total cost assigned to products $ $ $ Costs not assigned to products: Other Total cost $