Kunkel Company makes two products and uses a conventional costing system in whic
ID: 2341178 • Letter: K
Question
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. Merconurcon birect naterials cost per unit Direct labor cost per unit Direct labor-hours per unit Nurber of units produced 3 10.9e $3.88 5 8.8e 3.75 18,8e8 48.990 These products are customized to some degree for specific customers. 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 2. Management is consldering an actvity-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. Thls time Is expected to be distributed as follows during the upcoming year Engineering design tine (in hours) 4,88e Compute the unit product costs for the two products using the proposed ABC system. For all requlrements, do not round Intermediete calculetions. Round your finel answers to 2 decimal places.) . Unt produat cca: under oonvenional aystem 2. Unit product cost under ABC systemExplanation / Answer
Overhead rate = 336000/12000 = 28 per labour hour
1) Unit product cost under Conventional system
2) Unit product cost under ABC system
Mercon Wurcon Direct material 10 8 Direct labour 3 3.75 Overhead per unit 28*.20 = 5.6 28*0.25 = 7 Total unit product cost 18.6 18.75Related Questions
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