Use the following to answer questions:
Koszyk 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, P85G and C43S, about which it has provided the following data:
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|
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P85G
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C43S
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|
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Direct materials per unit..........
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$36.50
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$63.10
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|
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Direct labor per unit................
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$20.80
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$31.20
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|
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Direct labor-hours per unit......
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0.80
|
1.20
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|
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Annual production..................
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35,000
|
10,000
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The company's estimated total manufacturing overhead for the year is $2,264,000 and the company's estimated total direct labor-hours for the year is 40,000.
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:
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Activities and Activity Measures
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Estimated Overhead Cost
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|
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Supporting direct labor (DLHs).....
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$1,160,000
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|
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Setting up machines (setups).........
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288,000
|
|
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Parts administration (part types)....
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816,000
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|
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Total...............................................
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$2,264,000
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|
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Expected Activity
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|
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P85G
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C43S
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Total
|
|
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DLHs............
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28,000
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12,000
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40,000
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|
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Setups...........
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1,480
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920
|
2,400
|
|
|
Part types......
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1,880
|
840
|
2,720
|
1. The manufacturing overhead that would be applied to a unit of product P85G under the company's traditional costing system is closest to:
A) $89.67
B) $45.28
C) $44.39
D) $23.20
2. The manufacturing overhead that would be applied to a unit of product C43S under the activity-based costing system is closest to:
A) $71.04
B) $138.96
C) $67.92
D) $11.04