Testbank Question 173 (a) Show Answer Testbank Question 173 Stockin Company prod

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Testbank Question 173

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Testbank Question 173

Stockin Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.
Activity Pool Department Costs Cost driver Binding $279,740.00 Number of units Printing 882,000.00 Machine hours Product design 181,020.00 Change orders General 155,740.00 None Total overhead costs $1,498,500.00
Other information is as follows:
Tablets Books Units 78,800 19,700 Direct materials cost per unit $4.00 $12.00 Direct labor cost per unit $5.00 $10.00 Direct labor hours 27,000 13,500 Machine hours 160,000 120,000 Change orders 1,724 3,448

Explanation / Answer

Per unit of table, the manufacturing overhead cost :

= 1498500 / (27000+13500) =$37 per DLH

Now, per table unit = 37 * 27000 / 78800 = $12.68 per table unit

So, the Total cost of per table unit = DM $4 + DL $5 + MO/H C $12.68 = $21.68 per unit of table

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