Woodland Industries manufactures and sells custom-made windows. Its job costing

Question

Woodland Industries manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $16 per hour and that there were no beginning inventories. The following information was available for 2016, based on an expected production level of 47,400 units for the year, which will require 223,000 direct labor hours Budgeted Costs for 2016 $ 33,450 3,378,450 3,456,500 Cost Driver Used as Allocation Activity Cost Driver Base Cost Allocation Rate Materials handling Cutting and lathe work Assembly and inspection S 0.15 per part Number of parts used Number of parts used Direct labor hours 15.15 per part 15.50 per hour The following production, costs, and activities occurred during the month of July: Number of Parts Used 2,234 Direct Labor Hours 13,400 Direct Materials Units Produced 3,170 Costs $115,200 Required a. Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of July (using the activity-based costing approach). (Round "Cost per unit produced" to 2 decimal places.) Total manufacturing cost Cost per unit produced b. Assume instead that Woodland Industries applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described) Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of July. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2016.) (Round "Cost per unit produced" to 2 decimal places.) Total manufacturing cost Cost per unit produced

Explanation / Answer

a. total manufacturing cost direct materials 115,200 direct labor (13400*16) 214400 overhead applied materials handling (.15*2234) 335.1 cutting &lathe work (15.15*2234) 33845.1 assembly and inspection (13400*15.50) 207700 total overhead applied 241,880 total manufacturing cost 571,480 cost per unit produced 571480/47400 12.06 per unit b) total manufacturing cost direct materials 115,200 direct labor (13400*16) 214400 overhead applied (6868400/223000)*13400 412720 total manufacturing cost 742,320 cost per unit produced 742320/47400 15.66 per unit

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