Bustle Manufacturing Corporation Has a Traditional Costing System in Which

question 5

Essay

Bustle Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs).The company has two products,Z68W and K07E,about which it has provided the following data:
The company's estimated total manufacturing overhead for the year is $1,809,600 and the company's estimated total direct labor-hours for the year is 26,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports.Data for this proposed activity-based costing system appear below:
Required:
a.Determine the unit product cost of each of the company's two products under the traditional costing system.
b.Determine the unit product cost of each of the company's two products under activity-based costing system.

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Definitions:

Profit Margins

The percentage of revenue that remains as profit after all expenses have been deducted from sales.

Special Product Cost Projects

Involves the detailed analysis and calculation of costs associated with creating a product that is unique or outside the standard product line.

Cost Driver

A factor that influences or contributes to the expense of certain business operations.

Cost Pools

Groups of individual costs that are combined to allocate to cost objects, making the allocation process simpler and more standardized.