Cabat Company manufactures two products, Product C and Product D. The company es
ID: 2444652 • Letter: C
Question
Cabat Company manufactures two products, Product C and Product D. The company estimated it would incur $184,910 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below:
Compute the predetermined overhead rate under the current method. (Round your answer to 2 decimal places.)
Determine the unit product cost of each product for the current year. (Do not round your intermediate calculations. Round your final answer to 2 decimal places.)
The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor-hours. The activity-based costing system would use three activity cost pools. Data relating to these activities for the current period are given below:
Determine the unit product cost of each product for the current period using the activity-based costing approach. (Round your intermediate calculations and final answers to 2 decimal places.)
Cabat Company manufactures two products, Product C and Product D. The company estimated it would incur $184,910 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below:
Explanation / Answer
a)1)Total Direct labour hours
Product C = 4150 units *1.9 hours = 7885
Product D = 3350 units * 1.5 hours = 5025
12910
Predetermined overhead cost = overhead cost / labour hours = 184910/12910 = 14.32
a) 2) Unit cost of each product will be
Product C Product D
Direct material 15.10 27.90
Direct Labour 13.60 10.00
Manufactured overhead 27.21 21.48
55.9159.38
b)Overhead rate
Overhead rates
Estimated
Expected
Overhead rate
Overhead cost
Activity
a
B
(a/b)
Machine set up
12890
370
34.84
Purchase order
77340
2260
34.22
General factory
94680
12910
7.33
Overhead cost to each product
Product C
Product D
Activity
Amount
Activity
Amount
Machine set up
180
6271.2
190
6619.6
Purchase order
960
32851.2
1300
44486
General factory
7885
57797.05
5025
36833.25
Total overhead
96919.45
87938.85
Overhead cost per unit
Cost
units
A
B
A/B
Product C
96919.45
4150
23.35408
Product D
87938.85
3350
26.2504
Activity based costing , unit product cost
Product C
Product D
Direct material
15.1
27.9
Direct Labour
13.6
10
Manufactured overhead
23.35
23.35
52.05
61.25
Overhead rates
Estimated
Expected
Overhead rate
Overhead cost
Activity
a
B
(a/b)
Machine set up
12890
370
34.84
Purchase order
77340
2260
34.22
General factory
94680
12910
7.33
Overhead cost to each product
Product C
Product D
Activity
Amount
Activity
Amount
Machine set up
180
6271.2
190
6619.6
Purchase order
960
32851.2
1300
44486
General factory
7885
57797.05
5025
36833.25
Total overhead
96919.45
87938.85
Overhead cost per unit
Cost
units
A
B
A/B
Product C
96919.45
4150
23.35408
Product D
87938.85
3350
26.2504