Woodland Industries manufactures and sells custom-made windows. Its job costing

Question

Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $16 per hour and that there were no beginning inventories. The following information was available for 2016, based on an expected production level of 53,000 units for the year, which will require 220,000 direct labor hours Budgeted Costs for 2016 S 37,400 2,976,600 3,454,000 Cost Driver Used as Allocation Activity Cost Driver Base Cost Allocation Rate $ 0.17 per part Materials handling Cutting and lathe work Assembly and inspection Number of parts used Number of parts used Direct labor hours 13.53 per part 15.70 per hour The following production, costs, and activities occurred during the month of July Number of Parts Used Direct Labor Hours 13,700 Units Produced Direct Materials Costs 3,040 $103,500 459 Required a. Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activity-based costing approach). (Round "Cost per unit produced" to 2 decimal places.) Total manufacturing cost Cost per unit produced

Explanation / Answer

a.  

Cost per unit produced = 544,078.3 / 3,040

= 178.97 per unit.

b.

Predetermined overhead rate = Estimated overhead costs / Estimated Direct labour hours

(37,400 + 2,976,600 + 3,454,000) / 220,000

= 29.4 per direct labour hour

Cost per unit produced = 725,480 / 3,040

= 238.64 per unit.

Direct materials 103,500 Direct labour (13,700 * 16) 219,200 Materials handling (459 * 0.17) 78.03 Cutting and lathe work (459 * 13.53) 6,210.27 Assembly and inspection (13,700 * 15.7) 215,090 Total manufacturing cost 544,078.3

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