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In: Accounting

Enemia Company uses an overhead costing system based on direct labor hours for its two products...

Enemia Company uses an overhead costing system based on direct labor hours for its two products A and B. The company is considering adopting an activity-based costing system, and collects the following information for the month of October.

Product A Product B

Production units 12,000    6,000

Direct materials cost per unit $50.00    $40.00

Direct labor cost per hour $12.00    $12.00

Direct labor hours 30,000 10,000

Overhead    Overhead    Total    Activity Consumption

Cost pool cost    activity Product A Product B

Machine setup $120,000 600 setups 200    400

Engineering change order $110,000 220 orders    120 100

Facility rent $120,000    2,000 sq. feet    1300 700

Required:

(1) Compute the unit manufacturing cost of each product under a volume-based costing system based on direct labor hours.

(2) Compute the unit manufacturing cost of each product under the activity-based costing system.

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ekkarill92 answered 1 year ago
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