-1 Cassidy Manufacturing Corporation has a traditional costing system in which i
ID: 2597389 • Letter: #
Question
-1 Cassidy 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, VIP and Kommander, about which it has provided the following data:
The company's estimated total manufacturing overhead for the year is $2,449,440 and the company's estimated total direct labor-hours for the year is 54,000.
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:
The unit product cost of Product VIP under the company's traditional costing system is closest to:
$53.30.
$70.32.
$43.10.
$78.57.
VIP Kommander Direct materials per unit $ 27.50 $ 62.10 Direct labor per unit $ 15.60 $ 52.00 Direct labor-hours per unit 0.60 2.00 Annual production 40,000 15,000Explanation / Answer
VIP Kommander Total Direct labor hours per unit 0.6 2 Annual production 40000 15000 Direct labor hours incurred 24000 30000 54000 Total manufacturing overheads 2449440 Direct labor hours incurred 54000 Manufacturing overhead per direct labor hour 45.36 (2449440/54000) VIP Manufacturing overhead per direct labor hour 45.36 Direct labor hours incurred 24000 Manufacturing overhead cost 1088640 Annual production 40000 Manufacturing overhead per unit 27.22 VIP Direct material 27.5 Direct Labor 15.6 Manufacturing overhead per unit 27.22 Product cost per unit 70.32
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