Calculate the unit product cost for tablets

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Reference no: EM131491437

Assignment

Claire Company produces Tablets and Books. Total overhead costs traditionally have been allocated on the basis of direct labor hours. After implementing activity-based costing, managers determined the following cost pools and cost drivers. They also decided that general costs should no longer be allocated to products.

Activity Pool

Department Costs   Cost Driver

Binding

$247,500

Number of units

Printing

796,250

Machine hours

Product design

195,000

Change orders

General

606,250

None

Total overhead costs

$1,845,000


Other information is as follows:

Tablets

Books

 

Units

62,500

20,000

Direct materials cost per unit

$3.00

$10.00

Direct labor cost per unit

$4.00

$8.00

Direct labor hours

25,000

16,000

Machine hours

125,000

120,000

Change orders

1,250

2,000

Calculate predetermined OH rate.

Determine the unit product cost for Tablets and Books using the traditional costing system.

Calculate ABC rates.

Determine the unit product cost for Tablets and Books using the activity-based costing system.

Show that General cost is the difference between the total overhead costs allocated to products under the traditional system and the total cost allocated to products under the activity-based costing system.

Reference no: EM131491437

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