Traditional Product Costing versus Activity-based Costing
Assume that Panasonic Company has determined its estimated total manufacturing overhead cost for one of its plants to be $198,000 consisting of the following activity cost pools for the current month.
Activity Centers Activity Costs Cost Drivers Activity Level
Assembly setups---------------------------$45,000 Setup hours---------------- 1,500
Materials handling------------------------ 15,000 Number of moves--------- 300
Assembly----------------------------------- 120,000 Assembly Hours----------12,000
Maintenance------------------------------- 18,000 Maintenance hours------- 1,200
Total--------------------------------------- $198,000
Total direct labor hours used during the month were $8,000.Panasonic produces many different electronic products including the following two products produced during the current month.
Model X301 Model Z025
Units produced------------------------- 1,000 1,000
Direct Materials Costs--------------$15,000 $15,000
Direct Labor Costs------------------ $12,500 $12,500Direct Labor Hours----------------- 500 500
Setup hours---------------
------------ 50 100
Materials moves--------------------- 25 50
Assembly hours---------------------- 800 800
Maintenance hours------------------ 10 40
a. Calculate the total per unit cost of each model using direct labor hours to assign manufacturing overhead to products.