Company manufactures and sells custom-made windows. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $14 per hour and that there were no beginning inventories. The following information was available for 2010, based on an expected production level of 45,900 units for the year, which will require 232,000 direct labor hours: Activity (Cost Driver) Budgeted Cost Driver Used Cost Costs for 2010 as Allocation Base Allocation Rate Materials handling $278,400 # of parts used $0.28 per part Cutting and lathe work $2,505,600 Number of parts used $1.35 per part Assembly/ inspection $4,176,000 Direct labor hours $18.00 per hour. The following production, costs, and activities occurred during the month of March: Units Direct Number Direct Produced Materials Costs of Parts Used Labor Hours 3,010 $107,700 53,163 13,200
(a) Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of March (using the activity-based costing approach). tot mfg cost= cost/unit produced=
(b) Assume instead that company applies manufacturing overhead on a direct labor hours basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing cost and the cost per unit of the windows produced during the month of March. (Hint: You will need to calculate the predetermined overhead application rate using the total budgeted overhead costs for 2010. tot mfg cost= Cost/unit produced=