Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company’s two product lines appear below: Deluxe Standard Direct materials per unit $ 68.00 $ 56.00 Direct labor per unit $ 26.00 $ 21.20 Direct labor-hours per unit 0.70 DLHs 1.40 DLHs Estimated annual production 10,000 units 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: Estimated total manufacturing overhead $ 586,000 Estimated total direct labor-hours 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: Expected Activity Activity Cost Pools and Activity Measures EstimatedOverhead Cost Deluxe Standard Total Supporting direct labor (direct labor-hours) $ 385,000 7,000 70,000 77,000 Batch setups (setups) 132,000 200 100 300 Safety testing (tests) 69,000 30 70 100 Total manufacturing overhead cost $ 586,000 Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.
Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company’s two product lines appear below: Deluxe Standard Direct materials per unit $ 68.00 $ 56.00 Direct labor per unit $ 26.00 $ 21.20 Direct labor-hours per unit 0.70 DLHs 1.40 DLHs Estimated annual production 10,000 units 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: Estimated total manufacturing overhead $ 586,000 Estimated total direct labor-hours 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: Expected Activity Activity Cost Pools and Activity Measures EstimatedOverhead Cost Deluxe Standard Total Supporting direct labor (direct labor-hours) $ 385,000 7,000 70,000 77,000 Batch setups (setups) 132,000 200 100 300 Safety testing (tests) 69,000 30 70 100 Total manufacturing overhead cost $ 586,000 Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company’s two product lines appear below:
| Deluxe | Standard | |||||
| Direct materials per unit | $ | 68.00 | $ | 56.00 | ||
| Direct labor per unit | $ | 26.00 | $ | 21.20 | ||
| Direct labor-hours per unit | 0.70 | DLHs | 1.40 | DLHs | ||
| Estimated annual production | 10,000 | units | 50,000 | units | ||
The company has a traditional costing system in which manufacturing
| Estimated total manufacturing overhead | $ | 586,000 | |
| Estimated total direct labor-hours | 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:
| Expected Activity | |||||
| Activity Cost Pools and Activity Measures | Estimated Overhead Cost |
Deluxe | Standard | Total | |
| Supporting direct labor (direct labor-hours) | $ | 385,000 | 7,000 | 70,000 | 77,000 |
| Batch setups (setups) | 132,000 | 200 | 100 | 300 | |
| Safety testing (tests) | 69,000 | 30 | 70 | 100 | |
| Total |
$ | 586,000 | |||
Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.
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