Answer:
Miranda T. Corporation
Unit Product Cost of Product B under conventional job-order costing:
= $371.00
Explanation:
a) Data and Calculations:
Product A Product B
Production volume (units) 4,000 5,000
Direct materials $40 $60
Direct labor: at $10/hour $25 $20
Direct labor hours 2.5 2
b) Activity-based Costing System:
Manufacturing overhead:
Activity Cost Pool Estimated Activity cost Products
Overhead Cost Driver A B
Setups $240,000 No. of setups 80 40
General factory $2,350,000 Direct labor hours 10,000 10,000
Machine processing $120,000 Machine hours 2,000 1,000
Total Overhead Cost $2,710,000
c) Allocation of overhead based on direct labor hours:
Product A = $2,710,000/20,000 x 10,000 = $1,355,000
Product B = $2,710,000/20,000 x 10,000 = $1,355,000
d) Calculation of Total and Unit Product Costs:
Product A Product B
Direct Materials $160,000 $300,000
Direct Labor 250,000 200,000
Manufacturing overhead 1,355,000 1,355,000
Total product costs $1,765,000 $1,855,000
Unit cost $441.25 $371.00
