Cabat Company manufactures two products, Product C and Product D. The company es
ID: 2492992 • Letter: C
Question
Cabat Company manufactures two products, Product C and Product D. The company estimated it would incur $178,910 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: Product C 3,850 units Product D 3,050 units Estimated volume Direct labor-hours per unit Direct materials cost per unit Direct labor cost per unit 1.30 hours 90 hour $ 12.10 11.20 $ 24.30 S 7.60 Requried a-1. Compute the predetermined overhead rate under the current method. (Round your answer to2 decimal places.) Predetermined overhead rate per DLH a-2. 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.) Product C Product D Unit product costExplanation / Answer
Product C Product D Total Estimated Volume ( in units) 3850 3050 6900 Direct labor hours per unit 1.30 0.90 - Total Direct Labor Hours 5005 2745 7750 = Units x Direct labor hours per unit a-1 Now, Predetermined overhead rate = Estimated Overhead / Total Direct Labor hours = 178910 / 7750 23.0851613 = 23.09 per Direct Labor hour a-2 Now Unit product cost can be calculated as Product C Product D Direct material cost per unit 12.10 24.30 Direct Labour cost per unit 11.20 7.60 Manufacturing overhead per unit Product C = 1.30 hour x 23.09 per Hour 30.02 Product D = 0.90 hour x 23.09 per Hour 20.78 Total Unit Product Cost 53.32 52.68 b) Under Activity cost system each overhead is based on certain identified activity driver In given case we have Manufacturing overheads Cost Activity Driver Cost per Driver Machine Set Up 12290 250 set ups 49.16 Purchase orders 75540 2020 orders 37.40 General Factory 91080 7750 hours 11.75 178910 Cost allocated to Products Manufacturing overheads Cost per Driver Product C -Activity Product C - Total Product D -Activity Product D - Total Machine Set Up 49.16 120 5899.20 130 6390.80 Purchase orders 37.40 840 31416.00 1180 44132.00 General Factory 11.75 5005 58808.75 2745 32253.75 96123.95 82776.55 Now per Unit Overhead cost can be identified as Product C Product D Manufacturing overheads allocated 96123.95 82777 Estimated Volume ( in units) 3850 3050 Overhead cost per unit 24.97 27.14 Unit Product cost un der Activity based costing system can be totalled as Product C Product D Direct material cost per unit 12.10 24.30 Direct Labour cost per unit 11.20 7.60 Manufacturing overhead per unit 24.97 27.14 Total Unit Product Cost 48.27 59.04