the percent of flams sold has incresed from 25% of units sold to 37.% of unit sold.
flims flams
Sale price 150 500
direct materal per unit $75 $200
direct labor cost per hr $25 $ 25
direct labor hr per unit 1 hr per un 5 hr per unit
number of unit produced 25,000 15,000
the variable overhead for the coming year is estimated to be 3,000,000.
1. calculate the Wernecke Company's estimated direct labor hours to produce flims and flams.
Calculate the predetermined vaiable overhead rate tht will be used in the coming year using tradiditional costing system based upon direct labor hours.
3. Using a traditionals costing systems based upon direct labor hours, compute the unit product costs for flims and flams as well as contribution margin per unit.
4. Calculater the separate predetermined overhead rtes for each of the activities listed in the ABC costing system.
activity cost pool est over head cost exp act lev
setups $850,000 200 setups
Scraps $350,000 500 units
Testing $200,000 5,000 units
machine relate $1,600,000 100,000 Mhrs
Total 3,000,000
5. from the data above produce the projected 25,000 units of flims (calculate the expected variable overhead to be applied to flims)
6.(activity level needed to produce the projected 15,000 units of flams: (calculate the expected variable overhead to applied to flams)
7.calculate the total overhead(total for company) tht is expected to be applied to flims and flams.
8.Claculate the projected unit cost and unit contribution margin for flims and flams using ABC costing.
9. What conclusions can you draw about the use of traditional costing vs. ABC costing for the Wernecke Company. What recommendations do ou have for the president?