Determine the unit cost for each job using direct labor hour

Assignment Help Financial Accounting

Reference no: EM131203392

XYZ Company has identified the following overhead activities, costs, and activity drivers for the coming year:

Activity Expected Cost Activity Driver Activity Capacity

Material-handling costs $45,000 Number of moves 450

Machine costs 80,000 Machine hours 20,000

Order costs 15,000 Number of orders 750

Receiving costs 30,000 Number of parts 50,000

Setup costs 50,000 Number of setups 250

Assume that each activity corresponds to a process. XYZ’s normal activity is 5,000 direct labor hours. The following two jobs were completed during March:

Job X-1 Job Y-4

Direct materials $1,500 $2,000

Direct labor ($15 per hour) $750 $750

Units completed 200 200

Number of moves 3 6

Machine hours 125 75

Number of orders 3 12

Number of parts 200 800

Number of setups 1 4

Required:

1. Determine the unit cost for each job using direct labor hours to apply overhead (tradisional method)

2. Determine the unit cost for each job using ABC method

3. Which method is more accurate?give explaination.

Reference no: EM131203392

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