Traditional Product Costing versus Activity-Based Costing 1. Determine the unit

Question

Traditional Product Costing versus Activity-Based Costing

1. Determine the unit cost for each job using a traditional plantwide overhead rate based on direct labor hours.
Round cost per unit answers to two decimal places when applicable.

Hammond Air makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year:

Total predicted direct labor hours for next year is 26,000. The following data are for two recently completed jobs:

Job 201 Job 202 Direct materials $Answer $Answer Direct labor Answer Answer Overhead Answer Answer Total cost $Answer $Answer Units produced Answer Answer Cost per unit $Answer $Answer

Explanation / Answer

1. Determine the unit cost for each job using a traditional plantwide overhead rate based on direct labor hours

Predetermine overhead rate =estimated Total overhead/estimated total labour hour

= (244800+65000+460000+44000)/26000

Predetermine overhead rate = 31.30 per direct labour hour

Job 201 Job 202 Direct material 8000 9500 Direct labour 16100 59800 Overhead 6886 8451 Total cost 30986 77751 Unit 800 650 Unit cost 38.73 119.62

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