Solution-Determine the unit product costs of the Deluxe

Determine the unit product costs of the Deluxe

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Reference no: EM132478333

Question - Stillicum Corporation makes ultra-light-weight backpacking tents. Data concerning the company's two product lines appear below:

	Deluxe	Standard
Direct materials per unit	$50.00	$38.00
Direct labor per unit	$8.00	$6.80
Direct labor-hours per unit	0.70 DLHs	1.40 DLHs
Estimated annual production	10,000 units	50,000 units

The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Estimated total manufacturing overhead - $514,000

Estimated total direct labor-hours - 77,000 DLHs

Required -

1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system.

2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools:

Activity Cost Pools and Activity Measures	Estimated Overhead Cost	Expected Activity
Activity Cost Pools and Activity Measures	Estimated Overhead Cost	Deluxe	Standard	Total
Supporting direct labor (direct labor-hours)	$385,000	7,000	70,000	77,000
Batch setups (setups)	78,000	200	100	300
Safety testing (tests)	51,000	30	70	100
Total manufacturing overhead cost	$514,000

Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.

Reference no: EM132478333

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Determine the unit product costs of the Deluxe

Reference no: EM132478333

Reference no: EM132478333

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