Question

Coudriet 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, P93S and N40S, about which it has provided the following data: P93S N40S Direct materials per unit $ 21.90 $ 54.80 Direct labor per unit $ 8.80 $ 13.20 Direct labor-hours per unit 0.80 1.20 Annual production (units) 35,000 15,000 The company's estimated total manufacturing overhead for the year is $2,172,580 and the company's estimated total direct labor-hours for the year is 46,000. 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 (direct labor-hours) $ 552,000 Setting up machines (setups) 419,980 Part administration (part types) 1,200,600 Total $ 2,172,580 Expected Activity P93S N40S Total Direct labor-hours 28,000 18,000 46,000 Setups 2,162 1,656 3,818 Part types 1,886 2,116 4,002 The unit product cost of product P93S under the company's traditional costing system is closest to: A) $68.48 B) $63.26 C) $30.70 D) $40.30

Answer 1

Answer:

Coudriet Manufacturing Corporation

The unit product cost of product P93S under the company's traditional costing system is closest to:

= A) $68.48

Explanation:

a) Data and Calculations:

                                               P93S         N40S

Direct materials per unit    $ 21.90     $ 54.80

Direct labor per unit            $ 8.80      $ 13.20

Direct labor-hours per unit    0.80           1.20

Annual production (units) 35,000       15,000

Estimated total manufacturing overhead for the year = $2,172,580

Estimated total direct labor-hours for the year = 46,000

Predetermined overhead rate per direct labor hour = $47.23 ($2,172,580/46,000)

Overhead per hour             $47.23      $47.23

Overhead per unit              $37.78      $56.68

Product cost per unit under Traditional Costing System:

                                                     P93S         N40S

Direct materials per unit           $ 21.90       $ 54.80

Direct labor per unit                   $ 8.80        $ 13.20

Overhead per unit                    $37.78         $56.68

Total production cost per unit $68.48       $124.68