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 $436,000 consisting of the following activity cost pools for the current month:

Activity Centers	Activity Costs	Cost Drivers	Activity Level
Assembly setups	$ 124,000	Setup hours	4,000
Materials handling	57,000	Number of moves	600
Assembly	225,000	Assembly hours	12,500
Maintenance	30,000	Maintenance hours	1,200
Total	$436,000

Total direct labor hours used during the month were 16,000. Panasonic produces many different electronic products, including the following two products produced during the current month:

	Model X301	Model Z205
Units produced	2,000	2,000
Direct materials costs	$18,550	$18,550
Direct labor costs	$5,000	$5,000
Direct labor hours	200	200
Setup hours	30	60
Materials moves	75	150
Assembly hours	500	750
Maintenance hours	25	45

Required
a. Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products.
Round answers for unit cost to two decimal places, if applicable.

	X301	Z205
Direct materials	Answer	Answer
Direct labor	Answer	Answer
Overhead	Answer	Answer
Total cost	Answer	Answer
Units	Answer	Answer
Unit cost	Answer	Answer

b. Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.
Round answers for unit cost to two decimal places, if applicable.

	X301	Z205
Total direct materials costs	Answer	Answer
Total direct labor costs	Answer	Answer
Overhead costs:
Assembly setup	Answer	Answer
Materials handling	Answer	Answer
Assembly	Answer	Answer
Maintenance	Answer	Answer
Total costs	Answer	Answer
Units produced	Answer	Answer
Unit cost	Answer	Answer

Answer 1

Using Direct labor hour
	Model X301	Model Z205
	$	$
Direct materials costs	18,550	18,550
Direct labor costs	5,000	5,000
Overheads	5,450	5,450	See working note 1
Total Cost	29,000	29,000
Units produced	2,000	2,000
Unit Cost	14.50	14.50
Using Activity Level
	Model X301	Model Z205	Overhead cost attributable to 2
	$	$	Products allocated on the basis
Direct materials costs	18,550	18,550	Activity. See working note 2 Below
Direct labor costs	5,000	5,000
Setup hours	930	1,860	30	60	`
Materials moves	7,125	14,250	75	150
Assembly hours	9,000	13,500	500	750
Maintenance hours	625	1,125	25	45
	41,230	54,285
Units produced	2,000	2,000
Cost Per Unit	20.62	27.14
Note:1
It produces many other productsincluding the above 2 Products
Toatl Labor hour	16,000	A
Total Overhead	436,000	B
Hours used by above Products	400	C
Overhead used for 2 products	$10,900	B*C/A
Hours used by above Products Equally	200+200
Overhead Apportioned Equally	$5,450	Each
Working Note 2			A	B	C	D	B/A*C	B/A*D
Activity Centers	Activity Costs for all products	Activity Level for all products	Activity Level for 2 products	Overhead Cost for 2 Products	Activity Level model X30	Activity Level model Z205	Overhead allocation model X30	Overhead allocation model Z205
	$			$			$	$
Assembly setups	124,000	4,000	90	2,790	30	60	930	1,860
Materials handling	57,000	600	225	21,375	75	150	7,125	14,250
Assembly	225,000	12,500	1,250	22,500	500	750	9,000	13,500
Maintenance	30,000	1,200	70	1,750	25	45	625	1,125
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