Evaluate the unit product cost of each product

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Reference no: EM1311369

Determine the unit product cost of each product for the current period.

Carroll Company manufactures two products, Product DRT and Product CRT.

The company estimated it would incur $130,890 in manufacturing overhead costs during the current period. Overhead currently is assigned to the products on the basis of direct labour hours. Data concerning the current period\'s operations appear below:

	Product DRT	Product CRT
Estimated volume	400 units	1,200 units
Direct labour hours per unit	0.70 hour	1.20 hours
Direct materials cost per unit	$10.70	$16.70
Direct labour cost per unit	$11.20	$19.20

The company is considering using an activity-based costing system to compute unit product costs instead of its traditional system based on direct labour hours. The activity-based costing system would use three activity centres. Data relating to these activities for the current period:

		Expected Activity
Activity Center	Estimated Overhead Costs	Total	DRT	CRT
Machine setups	$13,570	230	100	130
Purchase orders	91,520	2,080	810	1,270
General factory	25,800	1,720	280	1,440
	$130,890

Determine the unit product cost of each product for the current period using the activity-based costing approach. (Material and direct labour are unchanged. A variety of arithmetic paths can be used to deal with over head. Generally, you must allocate the three overhead pools between the two products, and then calculate the overhead per unit.)

Reference no: EM1311369

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