Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below Standard Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production Deluxe Estimated total manufacturing overhead Estimated total direct labor-hours $ 67.00 $ 25.00 0.70 DLHS 10,000 units $ 55.00 $ 20.40 1.40 DLHS 50,000 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 $ 505,000 77,000 DLHS Required: 1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools
Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below Standard Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production Deluxe Estimated total manufacturing overhead Estimated total direct labor-hours $ 67.00 $ 25.00 0.70 DLHS 10,000 units $ 55.00 $ 20.40 1.40 DLHS 50,000 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 $ 505,000 77,000 DLHS Required: 1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below
Direct materials per unit
Direct labor per unit
Direct labor-hours per unit
Estimated annual production
Deluxe
Estimated total manufacturing overhead
Estimated total direct labor-hours
$ 67.00
$ 25.00
0.70 DLHS
10,000 units
Standard
$ 55.00
$ 20.40
1.40 DLHS
50,000 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
$ 505,000
77,000 DLHS
Required:
1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would
have the following three activity cost pools
Estimated Overhead
Cost
$ 300,000
129,000
60,000
$ 505,000
Expected Activity
Activity Cost Pools (and Activity Heasures)
Supporting direct labor (direct labor-hours)
Batch setups (setups)
Safety testing (tests)
Total manufacturing overhead cost
Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.
Deluxe,
7,000
200
30
Standard:
70,000
100
76
Total
77,000
300
100
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