Question

Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $14 per hour and that there were no beginning inventories. The following information was available for 2016, based on an expected production level of 45,700 units for the year, which will require 219,000 direct labor hours:

Activity Cost Driver	Budgeted Costs for 2016			Cost Driver Used as Allocation Base			Cost Allocation Rate
Materials handling	$	48,180			Number of parts used		$	0.22	per part
Cutting and lathe work		2,163,720			Number of parts used			9.88	per part
Assembly and inspection		4,511,400			Direct labor hours			20.60	per hour

The following production, costs, and activities occurred during the month of July:

Units Produced	Direct Materials Costs	Number of Parts Used	Direct Labor Hours
3,380	$101,500	2,677	13,500

PART A IS CORRECT

Required:

a. Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activity-based costing approach). (Round "Cost per unit produced" to 2 decimal places.)

	Total manufacturing cost $406,638 Cost per unit produced $120.31

NEED HELP WITH PART B

b. Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2016.) (Round "Cost per unit produced" to 2 decimal places.)

	Total manufacturing cost Cost per unit produced

Answer 1

	Activity Cost Driver	Budgeted Costs	Cost Driver Used as Allocation Base	Cost Allocation Rate
	Materials handling	48,180	Number of parts used	0.22	per part
	Cutting and lathe work	21,63,720	Number of parts used	9.88	per part
	Assembly and inspection	45,11,400	Direct labor hours	20.6	per hour
A	Calculation of Total Manufacturing Costs:		Based ABC
	Direct Material	1,01,500
	Overhead Cost:
	Materials handling	589	(0.22*2677)
	Cutting and lathe work	26,449	(9.88*2677)
	Assembly and inspection	2,78,100	(20.60*13500)
	Total Cost	4,06,638
	Units	3380
	Cost Per Unit	120.31
B	Activity Cost Driver	Budgeted Costs
	Materials handling	48,180
	Cutting and lathe work	21,63,720
	Assembly and inspection	45,11,400
	Total Cost	67,23,300
	DLH	2,19,000
	Cost Per DLH	30.70
	Calculation of Total Manufacturing Costs:		Blanket Rate
	Direct Material	1,01,500
	Overhead Cost (13500*30.70)	4,14,450
	Total Cost	5,15,950
	Units	3380
	Cost Per Unit	152.65