Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:
These products are customized to some degree for specific customers.
|
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Mercon
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Wurcon
|
|
Direct materials cost per unit
|
$
|
8.00
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$
|
6.00
|
|
Direct labor cost per unit
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$
|
13.00
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$
|
16.00
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Direct labor-hours per unit
|
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0.40
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2.80
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|
Number of units produced
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4,000
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8,000
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|
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Required:
The company's manufacturing overhead costs for the year are expected to be $720,000. Using the company's conventional costing system, compute the unit product costs for the two products. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)
Unit product cost: Mercon Wurcon
2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:
|
|
Mercon
|
Wurcon
|
Total
|
|
Engineering design time (in hours)
|
2,000
|
2,000
|
4,000
|
|
|
Compute the unit product costs for the two products using the proposed ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)
Unit Product Cost: Mercon Wurcon