Calculate Traditional and ABC Overhead Allocation and Determine the Cost of prod

Question

Calculate Traditional and ABC Overhead Allocation and Determine the Cost of products Using Job Order Costing and Compare the Outcomes of Each Method The president of Simple Products, Inc, is attending a management seminar and has just heard about activity-based costing. He wonders whether it would help his company. Simple Products, Inc. Uses common machinery to manufacture two simple products. Each year, there are two production runs for each product requiring similar set-up effort. Manufacturing overhead includes set-up cost is $198,000 annually and direct labor hours are expected to total 18,000 for the year. The following information is valuable for production A and B. Calculate the cost per unit for each product using traditional overhead allocation. Calculate the cost per unit for each product using activity-based costing.

Explanation / Answer

Answer :

Under Traditional Methods Product A Product B Total Unit Produced 1000 8000 9000 Direct Material Cost Per unit 14 14 Direct Labor Cost Per unit 24 24 Direct Labor hour Per unit 2 2 Total Direct labor hour expected 2000 16000 18000 Total overhead cost 198000 Total overhead per Labor hour 11.00 Total overhead allocated 22.00 22.00 Cost per unit after total over head 60 60

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.