Step-Up Corporation Manufactures Two Small Step Ladders, Regular and Deluxe

question 12

Essay

Step-Up Corporation manufactures two small step ladders, Regular and Deluxe. Deluxe ladders were added as a product line three years ago. Deluxe ladders are the more complex of the two products as they are extendable, requiring one hour of direct labour time per unit to manufacture, compared to one-half hours of direct labour time for Regular ladder.
Indirect costs are currently allocated to the products on the basis of direct labour hours. The company estimated it would incur $332,500 in manufacturing overhead costs and produce 6,000 units of Deluxe ladders and 20,000 units of Regular ladders during the current year.
Unit costs for materials and direct labour are:
Required:
a. Determine the unit cost of the two products using traditional costing with units as the allocation base.
b. Determine the unit cost of the two products using activity-based costing.

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Definitions:

Nonverbal Communication

The transfer of information through body language, facial expressions, gestures, and without the use of spoken language.

Eye Contact

Eye contact involves looking directly into another person's eyes to convey attention, confidence, and engagement in face-to-face communication.

Background Sounds

Ambient noises present in the environment where an event takes place or a recording is made, which are not the focus of the intended audience.

Diverse Cultures

The existence of multiple cultural groups within a society, each with its unique traditions, languages, and social practices.