3-743
Required:
In all computations involving dollars in the following requirements, round off your answer
to the nearest whole cent.
a. Determine the unit product cost of each product under the company’s traditional
costing method.
b. Determine the unit product cost of each product under the activity-based costing
method.
3-744
3-745
3-746
207.
Cabat Company manufactures two products, Product C and Product D. The company
estimated it would incur $177,910 in manufacturing overhead costs during the current
period. Overhead currently is applied to the products on the basis of direct labor-hours.
Data concerning the current period’s operations appear below:
Product C
Product
D
Estimated volume
3,800
units
3,000
units
Direct labor-hours per
unit
1.20 hours
0.80 hour
Direct materials cost per
unit
$11.60
$23.70
Direct labor cost per unit
$10.80
$7.20
Required:
Machine setups
Purchase orders
75,240
1,160
3-748
3-749
3-750
3-751
208
.
Rosman, Inc., manufactures and sells two products: Product Q1 and Product G2. Data
concerning the expected production of each product and the expected total direct labor-hours
(DLHs) required to produce that output appear below:
Expected
Production
Direct
Labor-Hours
Per Unit
Total Direct
Labor-Hours
Product Q1
300
9.0
2,700
Product G2
400
6.0
2,400
Total direct labor-hours
5,100
The direct labor rate is $23.80 per DLH. The direct materials cost per unit for each product is
given below:
Direct Materials
Cost per Unit
Product Q1
$273.60
Product G2
$166.80
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost
Pools
Activity
Measures
Overhead
Cost
Product Q1
Product G2
Labor-related
DLHs
$94,656
2,700
2,400
Product testing
Tests
69,608
600
800
General factory
MHs
384,000
3,900
3,600
$548,264
Required:
3-752
What is the difference between the unit product costs under the under the traditional costing
method and the activity-based costing system for each of the two products?
3-753
3-754
3-755
3-756
209.
Besser, Inc., manufactures and sells two products: Product D0 and Product S3. Data
concerning the expected production of each product and the
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product D0
800
5.0
4,000
Product S3
100
8.0
800
Total direct labor-
hours
4,800
The direct labor rate is $24.70 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product D0
$136.60
Product S3
$162.60
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product D0
Product S3
Total
Labor-related
DLHs
$187,104
4,000
800
4,800
Production orders
Orders
56,590
400
600
1,000
General factory
MHs
339,560
3,400
3,100
6,500
$583,254
Required:
3-757
In all computations involving dollars in the following requirements, round off your answer
to the nearest whole cent.
a. The company currently uses a traditional costing method in which overhead is applied
to products based solely on direct labor-hours. Compute the company’s predetermined
overhead rate under this costing method.
b. How much overhead would be applied to each product under the company’s traditional
costing method?
c. Determine the unit product cost of each product under the company’s traditional
costing method.
d. Compute the activity rates under the activity-based costing system.
e. Determine how much overhead would be assigned to each product under the activity-
based costing system.
f. Determine the unit product cost of each product under the activity-based costing
method.
g. What is the difference between the overhead per unit under the traditional costing
method and the activity-based costing system for each of the two products?
h. What is the difference between the unit product costs under the under the traditional
costing method and the activity-based costing system for each of the two products?
3-758
3-759
3-760
3-761
3-762
210.
Mahaxay, Inc., manufactures and sells two products: Product P0 and Product L5. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product P0
700
6.0
4,200
Product L5
200
3.0
600
Total direct labor-
hours
4,800
The direct labor rate is $16.90 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product P0
$107.20
Product L5
$119.20
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product P0
Product L5
Total
Labor-related
DLHs
$194,736
4,200
600
4,800
Product testing
Tests
114,647
600
700
1,300
General factory
MHs
182,505
3,400
3,500
6,900
$491,888