Cabio Company manufactures two products, Product C and Product D. The company estimated it would incur $177,910 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor- hours. Data concerning the current period's operations appear below: Estimated volume Direct labor-hours per unit Direct materials cost per unit Direct labor cost per unit Predetermined overhead rate Unit product cost Required: a-1. Compute the predetermined overhead rate under the current method. (Round your answer to 2 decimal places.) per DLH Product C Product C 3,800 units 1.20 hours $ 11.60 $ 12.00 Product D Product D 3,000 units .88 hour a-2. Determine the unit product cost of each product for the current year. (Round your intermediate calculations and final answers to 2 decimal places.) $ 23.70 $ 8.00

Cabio Company manufactures two products, Product C and Product D. The company estimated it would incur $177,910 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor- hours. Data concerning the current period's operations appear below: Estimated volume Direct labor-hours per unit Direct materials cost per unit Direct labor cost per unit Predetermined overhead rate Unit product cost Required: a-1. Compute the predetermined overhead rate under the current method. (Round your answer to 2 decimal places.) per DLH Product C Product C 3,800 units 1.20 hours $ 11.60 $ 12.00 Product D Product D 3,000 units .88 hour a-2. Determine the unit product cost of each product for the current year. (Round your intermediate calculations and final answers to 2 decimal places.) $ 23.70 $ 8.00

Name: Cabio Company manufactures two products, Product C and Product D. The
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Description: Cabio Company manufactures two products, Product C and Product D. The company estimated it would incur $177,910 inmanufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hour

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Cabio Company manufactures two products, Product C and Product D. The company estimated it would incur $177,910 in
manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-
hours. Data concerning the current period's operations appear below:
Estimated volume
Direct labor-hours per unit
Direct materials cost per unit
Direct labor cost per unit
Unit product cost
per DLH
Product C
Product C
3,800 units
1.20 hours
Required:
a-1. Compute the predetermined overhead rate under the current method. (Round your answer to 2 decimal places.)
Predetermined overhead rate :
$ 11.60
$ 12.00
Product D
Product D
3,000 units
.80 hour
a-2. Determine the unit product cost of each product for the current year. (Round your intermediate calculations and final answers to
2 decimal places.)
$ 23.70
$ 8.00

b. The company is considering using an activity-based costing system to compute unit product costs for external financial reports
instead of its traditional system based on direct labor-hours. The activity-based costing system would use three activity cost pools.
Data relating to these activities for the current period are given below:
Estimated Overhead
Costs
$ 12,198
75,240
90,480
$177,910
Activity Cost Pools
Machine setups
Purchase orders
Order size
Total
Unit product cost
Product C
Product C
110
820
4,560
Product D
Expected Activity
Product D
120
1,160
2,400
Determine the unit product cost of each product for the current period using the activity-based costing approach. (Round your
intermediate calculations and final answers to 2 decimal places.)
Total
230
1,980
6,960

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Step 1: Meaning of Overhead Rate

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Step 3: Calculation of Product cost for each of the product

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Step 4: Activity Based Costing

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