va 10.00 points Exercise 3-7 Contrast ABC and Conventional Product Costs IL03-2.
ID: 2339784 • Letter: V
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va 10.00 points Exercise 3-7 Contrast ABC and Conventional Product Costs IL03-2. Lo33. Lo3-4 Kunkel Company makes two products and uses a conventional costing system in which a single plantwide upcoming year follow overhead rate is computed based on direct labor-hours. Data for the two products for the MerconWurcon S 1000 8.00 s 3.00 S 3.75 0.20 0.25 10,000 40,000 cost per unit Direct labor cost per unit Direct labor-hours per unit Number of units produced e products are customized to some degree for specific customers Required: 1. The company's manufacturing overhead costs for the year are expected to be $336,000. 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 costExplanation / Answer
(1) Conventional Method :-
Mercon
Wurcon
DM cost pu
10
8
DL cost pu
3
3.75
Manufacturing O/H
[(336000/12000 hrs) * 2000 hrs] / 10000 units
=5.60
[(336000/12000 hrs) * 10000 hrs] / 40000 units
=7
Unit Product cost
18.60
18.75
*Labour Hrs for Mercon = 10000 units * 0.20 hrs = 2000 hrs
Labour Hrs for Wurcon = 40000 units * 0.25 hrs = 10000 hrs
(2) ABC Method :-
Mercon
Wurcon
DM cost pu
10
8
DL cost pu
3
3.75
Manufacturing O/H:
Using DL Hrs
($168000)
[(168000/12000 hrs) * 2000 hrs] / 10000 units
=2.80
[(168000/12000 hrs) * 10000 hrs] / 40000 units
=3.50
Using Engineering Design Time ($168000)
[(168000/8000 hrs) * 4000 hrs] / 10000 units
=8.40
[(168000/8000 hrs) * 4000 hrs] / 40000 units
=2.10
Unit Product cost
24.2
17.35
Mercon
Wurcon
DM cost pu
10
8
DL cost pu
3
3.75
Manufacturing O/H
[(336000/12000 hrs) * 2000 hrs] / 10000 units
=5.60
[(336000/12000 hrs) * 10000 hrs] / 40000 units
=7
Unit Product cost
18.60
18.75
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