Question - P Corporation manufactures two products - Product ABC and Product XYZ - expected production of Product ABC is 100 units and of XYZ is 500 units. The following information is available:
a. Determine the total overhead costs and the overhead cost per unit assigned to Product ABC using a single plant-wide overhead rate based on direct labor hours (traditional normal costing). You'll need to compute the pre-determined overhead rate and the overhead applied to each product, and then the overhead cost per unit.
b. Determine the total overhead costs and the overhead cost per unit assigned to Product ABC and to Product XY Z assuming activity based costing is used. The cost driver for the materials handling activity is number of material moves and the cost driver for the purchasing activity is number of purchase orders. You'll need to compute the pre-determined overhead rate for each activity cost pool and the amount of overhead to be applied to each product from each activity cost pool, and then the overhead cost per unit.