The company manufactures two products, Big and Small. The company has identified the following activities,...

The company manufactures two products, Big and Small. The company has identified the following
activities, overhead cost and cost drivers for two different products.

Activity Center	Activity Driver	Costs
Machine setup	Number of setups	$100,000
Special design	Design hours	$364,000
Production	Direct labor hours	$900,000
Machining	Machine hours	$300,000


	BIG	SMALL
Number of Units produced	10,000	35,000
Direct materials cost per unit	$75	$40
Direct labor cost per unit	$19.50	$13
Number of setups	100	100
Design hours	900	100
Direct labor hours	15,000	35,000
Machine hours	9,000	1,000

A. Calculate the overhead rate using traditional. The allocation base is Direct labor hours

B. Determine the cost per unit using Traditional.

C. Calculate the overhead rates using ABC

D. Determine the cost per unit using ABC

E. Which costing method is more accurate?

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Expert Solution

ekkarill92 answered 1 year ago

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