Guinta Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, O48C and G94Z, about which it has provided the following data:

Guinta Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, O48C and G94Z, about which it has provided the following data:

	O48C		G94Z
Direct materials per unit	$	24.80	$	56.30
Direct labor per unit	$	24.10	$	63.20
Direct labor-hours per unit		0.70		2.40
Annual production (units)		38,800		18,300

The company's estimated total manufacturing overhead for the year is $3,224,840 and the company's estimated total direct labor-hours for the year is 71,080.

The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

Activities and Activity Measures	Estimated Overhead Cost
Supporting direct labor (DLHs)	$	426,480
Setting up machines (setups)		723,840
Parts administration (part types)		2,074,520
Total	$	3,224,840

	Activities	O48C	G94Z	Total
	Supporting direct labor	27,160	43,920	71,080
	Setting up machines	800	3,360	4,160
	Parts administration	2,460	1,880	4,340

Required:
a.	Determine the unit product cost of each of the company's two products under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

	O48C	G94Z
Unit product cost	$	$

b.	Determine the unit product cost of each of the company's two products under activity-based costing system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

	O48C	G94Z
Unit product cost	$	$

 
Explanation:

a. 

Traditional Unit Product Costs

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $3,224,840 ÷ 71,080 DLHs = $45.37 per DLH

		O48C		G94Z
	Direct materials	$	24.80	$	56.30
	Direct labor		24.10		63.20
	Manufacturing overhead (0.70 DLHs × $45.37 per DLH;   2.40 DLHs × $45.37 per DLH)		31.76		108.89
	Unit product cost	$	80.66	$	228.39

b.
ABC Unit Product Costs.
 

		Estimated Overhead Cost		Total Expected Activity		Activity Rate
	Supporting direct labor	$	426,480	71,080	DLHs	$	6	per DLH
	Setting up machines	$	723,840	4,160	setups		174	per setup
	Parts administration	$	2,074,520	4,340	part types		478	per part type

Overhead cost for O48C
 

		Activity Rate			Activity		ABC Cost
	Supporting direct labor	$	6	per DLH	27,160	DLHs	$	162,960
	Setting up machines	$	174	per setup	800	setups		139,200
	Parts administration	$	478	per part type	2,460	part types		1,175,880
	Total						$	1,478,040

Overhead cost for G94Z
 

		Activity Rate			Activity		ABC Cost
	Supporting direct labor	$	6	per DLH	43,920	DLHs	$	263,520
	Setting up machines	$	174	per setup	3,360	setups		584,640
	Parts administration	$	478	per part type	1,880	part types		898,640
	Total						$	1,746,800

		O48C		G94Z
	Direct materials	$	24.80	$	56.30
	Direct labor		24.10		63.20
	Manufacturing overhead ($1,478,040 ÷ 38,800 units;   $1,746,800 ÷ 18,300 units)		38.09		95.45
	Unit product cost	$	86.99	$	214.95