Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
11. The unit product cost of product V47Q under the company’s traditional costing system is
closest to:
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–16
12. The unit product cost of product K41P under the activity-based costing system is closest
to:
Essay Questions
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–17
13. 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.
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–18
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–19
14. 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:
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–20
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.
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–21
15. 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:
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–22
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.
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–24
16. 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.
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–25
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–26
17. 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.
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports
7B–27
Chapter 07 – Appendix B Using a Modified Form of Activity-Based Costing to Determine Product Costs for
External Reports