Question

Direct materials per unit Direct labor cost per unit Direct labor-hours per unit Estimated annual production and sales Xactive $ 64.40 $ 17.80 1.4 DLHS 21,000 units Pathbreaker $ 50.60 $ 12.60 1 DLHS 71,000 units the company has a conventional costing system in which manufacturing overhead is applied to units based on jours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours $1,967,840 100,400 DLHS Required: -a. Compute the predetermined overhead rate based on direct labor-hours. -b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each roduct . The company is considering replacing its conventional costing system with an activity-based costing system that we ssign its manufacturing overhead to the following four activity cost pools: Estimated Overhead Cost $ 707,820 540,000 655,160 64,860 $1,967,840 Expected Activity Xactive Pathbreaker Total 29,400 71,000 100, 400 230 130 36e Activity Cost Pools and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Product sustaining number of products) General factory (machine-hours) Total manufacturing overhead cost 2,100 7,100 9,200

Answer 1

1-a.
Predetermined overhead rate = Estimated total manufacturing overhead / Estimated total direct labor hours = 1967840 / 100400	19.60	per DLH

1-b.
	Xactive	Pathbreaker
Overhead applied [ Predetermined overhead rate * Direct labor hours ]	576240	1391600
(/) Estimated annual production	21000	71000
Overhead cost per unit	27.44	19.60
	Xactive	Pathbreaker
Direct materials per unit	64.40	50.60
Direct labor cost per unit	17.80	12.60
Overhead cost per unit	27.44	19.60
Unit product cost	109.64	82.80

2.
Activity cost pools	Activity rate [ Estimated overhead cost / Expected total activity ]
Supporting direct labor	7.05	per DLH
Batch setup	1500	per setup
Product sustaining	327580	per product
General factory	7.05	per MHR

3.
	Xactive	Pathbreaker
Overhead alloction : [ Activity rate * Expected activity ]
Supporting direct labor	207270	500550
Batch setup	345000	195000
Product sustaining	327580	327580
General factory	14805	50055
Total overhead allocated	894655	1073185
(/) Estimated annual production	21000	71000
Overhead cost per unit	42.60	15.12
	Xactive	Pathbreaker
Direct materials per unit	64.40	50.60
Direct labor cost per unit	17.80	12.60
Overhead cost per unit	42.60	15.12
Unit product cost	124.80	78.32