Question

Traditional Product Costing Versus Activity-Based Costing
Assume that Panasonic Company has determined its estimated total manufacturing overhead cost for one of its plants to be $216,000, consisting of the following activity cost pools for the current month:

Activity Centers	Activity Costs	Cost Drivers	Activity Level
Assembly setups	$51,000	Setup hours	1,500
Materials handling	21,000	Number of moves	300
Assembly	120,000	Assembly hours	12,000
Maintenance	24,000	Maintenance hours	1,200
Total	$216,000

Total direct labor hours used during the month were 8,000. Panasonic produces many different electronic products, including the following two products produced during the current month:

	Model X301	Model Z205
Units produced	1,000	1,000
Direct materials costs	$21,000	$21,000
Direct labor costs	$18,500	$18,500
Direct labor hours	500	500
Setup hours	50	100
Materials moves	25	50
Assembly hours	800	800
Maintenance hours	10	40

a. Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products.
Round rate to two decimal places.

Overhead rate per direct labor hour Answer

Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.

	X301	Z205
Direct materials	Answer	Answer
Direct labor	Answer	Answer
Overhead cost	Answer	Answer
Total cost	Answer	Answer
Units	Answer	Answer
Per unit cost	Answer	Answer

b. Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.

Assembly setups	Answer
Materials handling	Answer
Assembly	Answer
Maintenance	Answer

Round cost per unit to two decimal places, if needed.

	X301	Z205
Direct materials cost	Answer	Answer
Direct labor cost	Answer	Answer
Manufacturing overhead costs:
Assembly setup	Answer	Answer
Materials handling	Answer	Answer
Assembly	Answer	Answer
Maintenance	Answer	Answer
Total cost	Answer	Answer
Units	Answer	Answer
Per unit cost	Answer	Answer

Answer 1

Ans:Total overhead cost= $216,000

Total direct labor hours= 8000

overhead cost per direct labor hour= $ 27

costs/models	model x301	model z205
direct material costs	$21,000	$21,000
direct labor costs	$18,500	$18,500
overhead costs(500*27)	$13,500	$13,500
Total costs	$ 53,000	$53000
number of units	1000	1000
cost per unit	$53.00 per unit	$53.00 per unit

B). calculation of total per unit cost using Activity based costing

Activity center	Activity cost	Activity level	Cost per activity(ACTIVITY COST/ activity level)
Assembly setup	$51,000	$1500	$ 34	Per setup hours
Material handling	$21000	$300	$70	per number of moves
Assembly	$120,000	$12000	$10	per assembly hours
Maintenance	$24,000	$1200	$20	per Maintenance hours

calculation of overhead costs

	Model X301			Model z205
Costs	Activity	Rate	Amount($)	Activity	Rate	Amount($)
Assembly setup	50	$34	$1700	100	$34	$3400
Material handling	25	$70	$1750	50	$70	$3500
Assembly	800	$10	$8000	800	$10	$8000
Maintenance	10	$20	$200	40	$20	$800
Total overheads			$11,650			$15,700

Calculation of units costs

costs/models	model x301	Model Z205
Direct material costs	$21000	$21000
Direct labor costs	$18500	$18500
Overhead costs	$11650	$15,700
Number of units	$1000	$1000
Cost per unit	$11.65	$15.70