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:

1.

The predetermined overhead rate is computed as follows:

 

Predetermined overhead rate	=	$310,000	= $6.20 per DLH
		50,000 DLHs

  

The unit product costs under the company's traditional costing system are computed as follows:

	Deluxe		Standard
Direct materials	$	82.00	$	51.00
Direct labor		12.40		9.50
Manufacturing overhead            (.80 DLH × $6.20 per DLH; 1.00 DLH × $6.20 per DLH)		4.96		6.20
Unit product cost	$	99.36	$	66.70

2.

The activity rates are computed as follows:

Activities	(a) Estimated Overhead Cost		(b) Total Expected Activity		(a) ÷ (b) Activity Rate
Supporting direct labor	$	175,000	50,000	DLHs	$	3.50	per DLH
Batch setups	$	66,700	290	setups	$	230	per setup
Safety testing	$	68,300	100	tests	$	683.00	per test

Manufacturing overhead is assigned to the two products as follows:

Deluxe Product:

Activity Cost Pool	(a) Activity Rate			(b) Activity		(a) × (b) ABC Cost
Supporting direct labor	$	3.50	per DLH	20,000	DLHs	$	70,000
Batch setups	$	230	per setup	180	setups		41,400
Safety testing	$	683.00	per test	29	tests		19,807
Total						$	131,207

Standard Product:

Activity Cost Pool	(a) Activity Rate			(b) Activity		(a) × (b) ABC Cost
Supporting direct labor	$	3.50	per DLH	30,000	DLHs	$	105,000
Batch setups	$	230	per setup	110	setups		25,300
Safety testing	$	683.00	per test	71	tests		48,493
Total						$	178,793

 

Activity-based costing unit product costs are computed as follows:

 

	Deluxe		Standard
Direct materials	$	82.00	$	51.00
Direct labor		12.40		9.50
Manufacturing overhead         ($131,207 ÷ 25,000 units; $178,793 ÷ 30,000 units)		5.25		5.96
Unit product cost	$	99.65	$	66.46