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Saturday, 15 November 2014

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:

 O48CG94Z
  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 MeasuresEstimated
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     
 





   ActivitiesO48CG94ZTotal
   Supporting direct labor27,160    43,920    71,080    
   Setting up machines800    3,360    4,160    
   Parts administration2,460    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: