Question

Look 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, N06D and M09K, about which it has provided the following data: N06D M09K Direct materials per unit $ 33.40 $ 61.20 Direct labor per unit $ 6.00 $ 28.00 Direct labor-hours per unit 0.20 1.00 Annual production (units) 48,200 15,000 The company's estimated total manufacturing overhead for the year is $1,754,571 and the company's estimated total direct labor-hours for the year is 24,640. 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 Supporting direct labor (DLHs) $ 862,400 Setting up machines (setups) 476,307 Parts administration (part types) 415,864 Total $ 1,754,571 Expected Activity N06D M09K Total DLHs 9640 15,000 24,640 Setups 1670 1021 2691 Part types 641 267 908 The manufacturing overhead that would be applied to a unit of product N06D under the company's traditional costing system is closest to: (Round your intermediate calculations to 2 decimal places.) Group of answer choices

Answer 1

Answer:

The answer is "96.11 per unit".

Explanation:

Formula:

$\text{ The total manufacturing overhead applied in N06D}$ $= (\frac{\text{Estimated overhead cost}}{\text{Total Activity}}) \times \text{Activity Consumed}$

$= (862,400 \times \frac{9,640}{24,640} + 476,307 \times \frac{1,670}{2,691} + 415,864 \times \frac{641}{908})\\\\= (862,400 \times 0.391233766 + 476,307 \times 0.620587142 + 415,864 \times 0.705947137)\\\\= (337,400+ 295,590 + 293,578)\\\\=926,568$

Calculating the unit cost:

$= \frac{926,568}{9640} \\\\=96.1170124\\\\=96.11$