Ok so here are the correct numbers to put in. I have the Traditional portion cor

Question

Ok so here are the correct numbers to put in. I have the Traditional portion correct, I would like to see the ABC portion of this with these numbers worked out, because I'm at the end of the equation but with these numbers please:

Exercise 3-7 Contrast ABC and Conventional Product Costs [LO2, LO3, LO4]

Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:

The company's manufacturing overhead costs for the year are expected to be $696,960. Using the company's conventional costing system, compute the unit product costs for the two products. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)

Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:

Compute the unit product costs for the two products using the proposed ABC system. (Round your final answers to 2 decimal places.)

Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:

Explanation / Answer

Hi,

Please find the answer as follows:

Part 1:

Total Direct Labor Hours = 21000*.48 + 72000*.26 = 28800

Predetermined Overhead Rate = Total Overhead/Total Direct Labor Hours = 696960/28800 = 24.2

Unit Product Cost (Mercon) = 12.9 (Direct Material) + 5.4 (Direct Labor) + 24.2*.48 (Overhead Cost Applied) = 29.92

Unit Product Cost (Wurcon) = 21.4 (Direct Material) + 3.5 (Direct Labor) + 24.2*.26 (Overhead Cost Applied) = 31.19

Part 2:

Predetermined Overhead Rate = (696960*.50)/2 = 12.1

Engineering Design Rate = (696960*.50)/4400 = 79.2

Unit Product Cost (Mercon) = 12.9 (Direct Material) + 5.4 (Direct Labor) + (12.1*.48 + 79.2*2300/21000) (Overhead Cost Applied) = 32.78

Unit Product Cost (Wurcon) = 21.4 (Direct Material) + 3.5 (Direct Labor) + (12.1*.26 + 79.2*2100/72000) (Overhead Cost Applied) = 30.36

Thanks.

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