Question

In: Accounting

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?

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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