9-155
146. Hugle Corporation’s activity-based costing system has three activity cost pools–
Machining, Setting Up, and Other. The company’s overhead costs have already been allocated to
these cost pools as follows:
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs
in the Other cost pool are not assigned to products. The following table shows the machine-hours
and number of batches associated with each of the company’s two products:
Additional data concerning the company’s products appears below:
Required:
a. Calculate activity rates for each activity cost pool using activity-based costing.
b. Determine the amount of overhead cost that would be assigned to each product using activity–
based costing.
c. Determine the product margins for each product using activity-based costing.
9-157
147. Cabanos Company manufactures two products, Product C and Product D. The company
estimated it would incur $160,790 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:
Required:
a. Compute the predetermined overhead rate under the current method, and determine the unit
product cost of each product for the current year.
b. The company is considering using an activity-based costing system to compute unit product
costs for external financial reports instead of its traditional system based on direct labor-hours.
The activity-based costing system would use three activity cost pools. Data relating to these
activities for the current period are given below:
Determine the unit product cost of each product for the current period using the activity-based
costing approach.
9-160
148. Kuechle Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on direct
labor-hours (DLHs). The company has two products, I49L and B26W, about which it has provided
the following data:
The company’s estimated total manufacturing overhead for the year is $1,793,790 and the
company’s estimated total direct labor-hours for the year is 57,000.
The company is considering using a variation of activity-based costing to determine its unit
product costs for external reports. Data for this proposed activity-based costing system appear
below:
Required:
a. Determine the unit product cost of each of the company’s two products under the traditional
costing system.
b. Determine the unit product cost of each of the company’s two products under activity-based
costing system.
9-162
149. Bustle Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on direct
labor-hours (DLHs). The company has two products, Z68W and K07E, about which it has provided
the following data:
The company’s estimated total manufacturing overhead for the year is $1,809,600 and the
company’s estimated total direct labor-hours for the year is 26,000.
The company is considering using a variation of activity-based costing to determine its unit
product costs for external reports. Data for this proposed activity-based costing system appear
below:
Required:
a. Determine the unit product cost of each of the company’s two products under the traditional
costing system.
b. Determine the unit product cost of each of the company’s two products under activity-based
costing system.
9-164
150. Stoughton Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on direct
labor-hours (DLHs). The company has two products, M31P and M07T, about which it has
provided the following data:
The company’s estimated total manufacturing overhead for the year is $2,675,460 and the
company’s estimated total direct labor-hours for the year is 51,000.
The company is considering using a variation of activity-based costing to determine its unit
product costs for external reports. Data for this proposed activity-based costing system appear
below:
Required:
a. Determine the manufacturing overhead cost per unit of each of the company’s two products
under the traditional costing system.
b. Determine the manufacturing overhead cost per unit of each of the company’s two products
under activity-based costing system.
9-166
151. Wetz Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on direct
labor-hours (DLHs). The company has two products, Q30V and S33B, about which it has provided
the following data:
The company’s estimated total manufacturing overhead for the year is $1,527,600 and the
company’s estimated total direct labor-hours for the year is 38,000.
The company is considering using a variation of activity-based costing to determine its unit
product costs for external reports. Data for this proposed activity-based costing system appear
below:
Required:
a. Determine the manufacturing overhead cost per unit of each of the company’s two products
under the traditional costing system.
b. Determine the manufacturing overhead cost per unit of each of the company’s two products
under activity-based costing system.
