Part II. ABC (18 points) Cabalo Company manufactures two products, Product C and
ID: 2508111 • Letter: P
Question
Part II. ABC (18 points) Cabalo Company manufactures two products, Product C and Product D. The company ent period. Overhead currently is applied to the products on the basis of direct labor hours. it would incur $130,890 in manufacturing overhead costs during the s. Data concerning the current period's operations appear below Estimated unit production. Direct labor hours per unit of product. Direct materials cost per unit of product Direct labor cost per unit of product.. Product C 400 units 0.70 hour $10.70 Product D 1,200 units 1.20 hours $16.70 11.20 S19.20 Required: a. Compute the predetermined overhead rate under the current method, and b. The company is considering using an activity-based costing system to determine the unit product cost of each product for the current year.(6 points) compute unit product costs 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: Estimated Overhead Expected Activity Costs Product C Product D Total 130 230 Activity Cost Pool S 13,570 100 91,520 81O 1,270 2.080 25,800 280 1,440 1,720 General factory. S130.890 Determine the unit product cost of each product for the current period using the activity-based costing approach. (12 points) Please round your answer to one decimal place (Please write your answers on the Answer Sheets!)Explanation / Answer
a) Predetermined overhead rate= Manufacturing overhead/direct labor hours =130890/1720=76.10 per labor hour Calculation of total direct labor hours Product C Product D Total Units prouction 400 1200 Direct labor hours per unit 0.7 1.2 Direct labor hours 280 1,440 1,720 Calculation of per unit product cost Product C Product D Direct Material $ 10.7 $ 16.7 Direct labor $ 11.2 $ 19.2 Manufacturing overhead $ 53.3 $ 91.3 Total per unit cost $ 75.2 $ 127.2 b) Calculation of per unit product cost Product C Product D Direct Material $ 10.7 $ 16.7 Direct labor $ 11.2 $ 19.2 Manufacturing overhead: Machine setups $ 14.8 $ 6.4 Purchase orders $ 89.1 $ 46.6 General factory $ 10.5 $ 18.0 Total per unit cost $ 136.3 $ 106.9