Question

Upton Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, Long and Short, about which it has provided the following data: Long Short Direct materials per unit $ 14.70 $ 48.50 Direct labor per unit $ 17.30 $ 50.90 Direct labor-hours per unit 0.70 2.10 Annual production 60,000 10,000 The company's estimated total manufacturing overhead for the year is $3,486,420 and the company's estimated total direct labor-hours for the year is 63,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Estimated Overhead Cost Direct labor support (DLHs) $ 2,034,020 Setting up machines (setups) 434,400 Part administration (part types) 1,018,000 Total $ 3,486,420 Expected Activity Long Short Total DLHs 42,000 21,000 63,000 Setups 1,190 1,750 2,940 Part types 950 2,710 3,660 The unit product cost of product Long under the company's traditional costing system is closest to:
$54.60.
$70.74.
$67.80.
$32.00.

Answer 1

Answer:

$67.80.

Explanation:

                                                 Long                       Short

Direct materials per unit          $ 14.70                   $ 48.50

For 60,000 units                   882,000

Direct labor per unit                 $ 17.30                   $ 50.90

For 60,000 units                   1038000

Direct labor-hours per unit       0.70                           2.10

Estimated Overhead          1796,077                  1690,343

Total Costs                         3716077

Unit Cost = Total Costs/ No of units = $    3716077/ 60,000= $ 61.93=$ 62

Working

Direct labor support  Cost for Long= ( $ 2,034,020 / 63,000 )* 42,000   =

$ 1356,013

Setting up machines Cost for Long(434,400 /  2,940 )*1190=  $175,829

Part administration Cost for Long =( 1,018,000 / 3,660)* 950= $ 264,235

                                                 Long           Short

Direct materials per unit          $ 14.70     $ 48.50

Direct labor per unit                 $ 17.30      $ 50.90

Direct labor-hours per unit       0.70             2.10

Annual production                 60,000           10,000

Estimated total manufacturing overhead  $3,486,420

Estimated total direct labor-hours  63,000

Activities                             Activity                Estimated            

                                            Measures        Overhead Cost

Direct labor support              (DLHs)            $ 2,034,020

Setting up machines             (setups)                434,400

Part administration             (part types)             1,018,000

Total                                                                  $ 3,486,420

Expected Activity             Long           Short          Total DLHs

                                       42,000         21,000            63,000

Setups                              1,190             1,750             2,940

Part types                         950             2,710               3,660

The unit product cost of product Long under the company's traditional costing system is closest to: