Hello, I need help with the bottom 2 questions about using a computing . can you

Question

Hello, I need help with the bottom 2 questions about using a computing . can you show your work thank you.

Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow Direct materials cost per unit Direct labor cost per unit Direct labor-hours per unit Number of units produced Mercon Wurcon $ 8.00 $ 6.00 S 13.00 $ 16.00 2.80 4,000 8,000 0.40 These products are customized to some degree for specitic customers Required: 1. The company's manufacturing overhead costs for the year are expected to be $720,000. Using the company's conventional costing system, compute the unit product costs for the two products. (Do not round intermediate calculation. Round your final answers to 2 decimal places.) Mercon Wurcon Unit product cost 642.00 $ 744.00 2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year: Mercon Wurcon Total Engineering design time (in hours) 2,000 2,000 4,000 Compute the unit product costs for the two products using the proposed ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places.) Mercon Wurcon Unit product cost

Explanation / Answer

1. Conventional Costing System:

Predetermined overhead rate per direct labor hour = Estimated Manufacturing Overhead Cost / Total Direct Labor Hours = $ 720,000 / ( 4,000 x 0.40 + 8,000 x 2.80) = $ 720,000 / 24,000 = $ 30.

Manufacturing overhead cost per unit of Mercon = $ 30 x 0.40 = $ 12.

Unit product cost = Direct Materials + Direct Labor + Manufacturing Overhead = $ ( 8 + 13 + 12) = $ 33.

Manufacturing overhead cost per unit of Wurcon = $ 30 x 2.80 = $ 84.

Unit product cost = $ ( 6 + 16 + 84) = $ 106.

2. Activity Based Costing System :

Unit product cost of Mercon = $ ( 8 + 13 + 15 x 0.40) + 2,000 / 4,000 x $ 360,000 x 1/4,000 = $ 72.

Unit cost of Wurcon = $ ( 6 + 16 + 15 x 2.80) + 2,000 / 4,000 x $ 360,000 x 1/ 8,000 = $ 86.50.

Mercon Wurcon Unit Product Cost $ 33 $ 106

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