Stiicum Corporation makes ultr light-weight backpacking tents. Data concerning t

Question

Stiicum Corporation makes ultr light-weight backpacking tents. Data concerning the company's two Di Direct labor per unit 59.00 17.00 47.00 14. 00 per unit 10,000 units 50,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data r appear below $627,000 Estimated total direct labor-hours 77,000 DIHs Required: 1. Determine 2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools: the unit product costs of the Deluxe and onal Estimated Overhead Supporting direct labor (direct labor-hours) Batch 462,000 7,000 70,000 77,000 300 105,000 60,000 200 30 100 70 100 $ 627,000 Zotal manufacturing overhead cost Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system

Explanation / Answer

1)predetermined overhead rate =estimated overhead /estimated direct labor hours

          = 627000/77000

           = $ 8.14 per DLH

**DLH per unit for Deluxe = 17/.7=24.29

standard =14/1.4=10

2)

130000/10000 =$ 13

70.94

deluxe standard Direct material 59 47 Direct labor 17 14 overhead 24.29*8.14 = 197.72 10*8.14= 81.4 UNit cost 273.72 142.4

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