Fraize Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, B21P and O11L, about which it has provided the following data:
The company's estimated total manufacturing overhead for the year is $2,870,100 and the company's estimated total direct labor-hours for the year is 54,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Required:
a. Determine the unit product cost of each of the company's two products under the traditional costing system.
b. Determine the unit product cost of each of the company's two products under activity-based costing system.

Question

Fraize Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, B21P and O11L, about which it has provided the following data:  
The company's estimated total manufacturing overhead for the year is $2,870,100 and the company's estimated total direct labor-hours for the year is 54,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:  
Required:
a. Determine the unit product cost of each of the company's two products under the traditional costing system.
b. Determine the unit product cost of each of the company's two products under activity-based costing system.

Quizplus · Accepted Answer

The Answer of Fraize Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, B21P and O11L, about which it has provided the following data:  
The company's estimated total manufacturing overhead for the year is $2,870,100 and the company's estimated total direct labor-hours for the year is 54,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:  
Required:
a. Determine the unit product cost of each of the company's two products under the traditional costing system.
b. Determine the unit product cost of each of the company's two products under activity-based costing system.

Fraize Manufacturing Corporation Has a Traditional Costing System in Which