Determine the unit cost for each job using the abc method

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Reference no: EM133922990

Problem

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

Task

I. Determine the unit cost for each job, using direct labor hours to apply overhead (traditional method).
II. Determine the unit cost for each job, using the ABC method. Get the instant assignment help.
III. Which method is more accurate?

Reference no: EM133922990

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