Friday, 26 September 2014

Pryad Corporation makes ultra-lightweight backpacking tents. Data concerning the company's two product lines appear below:

Pryad Corporation makes ultra-lightweight backpacking tents. Data concerning the company's two product lines appear below:
 
  Deluxe Standard
  Direct materials per unit $ 82   $ 51  
  Direct labor per unit $ 12.40   $ 9.50  
  Direct labor-hours per unit   .80  DLHs   1.00  DLHs
  Estimated annual production   25,000  units   30,000  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 $310,000  
  Estimated total direct labor-hours 50,000  DLHs

 
Required:
1.
Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. (Round your intermediate and final answers to 2 decimal places. Omit the "$" sign in your response.)

        Deluxe       Standard
  Unit product cost $   $  


2.
The company is considering replacing its traditional costing system for determining unit product costs for external reports with an activity-based costing system. The activity-based costing system would have the following three activity cost pools:
 
   
Expected Activity
  Activities and Activity Measures Estimated
Overhead Cost
Deluxe Standard Total
  Supporting direct labor (direct labor-hours) $ 175,000    20,000    30,000    50,000  
  Batch setups (setups)   66,700    180    110    290  
  Safety testing (tests)   68,300    29    71    100  
 

     
  Total manufacturing overhead cost $ 310,000         
 



     

  
      Determine the unit product costs of the Deluxe and Standard products under the activity-based costing system. (Round your intermediate and final answers to 2 decimal places. Omit the "$" sign in your response.)

      Deluxe     Standard
  Unit product cost $   $  



Explanation: