a) Compute the predetermi determine the unit product cost of each product for the current year. Determine the unit product cost of each product for the current period using the activity- based costing approach. Which method will probably provide a better representation of unit cost? Explain briefl-
Krypton Inc. manufactures two products, Vintex and Bromal. The company estimated it would incur $160,690 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labour hours. Data concerning the current period's operations appear below:
Vintex Bromal
Estimates Volume 4700 units 3300 units
Direct labour hours per unit 2.1 hours 1.6 hours
Direct labour cost per unit $33.60 $25.60
Direct material cost per unit $4.80 $12.70
The company is considering using an activity-based costing system to compute unit product costs instead of its traditional single plant-wide system based on direct labour hours. The activity based costing system would use three activity cost pools and drivers:
Activity Cost Pool: Driver:
Material aquisition costs Purchase orders
Machine costs Machine setups
General
Step by step
Solved in 2 steps
