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unit cost based on direct labor hours & activity costing

See the attached Excel file.

A company manufactures two products, X21 and Y37. For years they have used a plantwide manufacturing support cost rate based on direct labor hours. The attached file contains the data collected over the last year.

(a) calculate the unit cost of each product using direct labor hours to allocate all manufacturing costs, and
(b) calculate the unit cost of each product using activity based costing?

ITEM X21 Y37
Units produced and sold 50,000 100,000
Direct labor hours used 100,000 300,000
Direct labor cost 1,000,000 4,500,000
Number of times handled 40,000 20,000
Number of parts 12,000 8,000
Number of design changes 2,000 1,000
Number of product setups 8,000 6,000

Last year's manufacturing support costs:
COST POOL ACTIVITY COSTS
Handling 3,000,000
Number of parts 2,400,000
Design changes 3,300,000
Setups 2,800,000

Total 11,500,000

The direct materials cost for product X21 is \$120/unit and for Y37 it is \$140/unit.

Solution Preview

ITEM X21 Y37 Total
Units produced and sold 50,000 100,000
Direct labor hours used 100,000 300,000 400,000
Direct labor cost 1,000,000 4,500,000
Number of times handled 40,000 20,000 60,000
Number of parts 12,000 8,000 20,000
Number of design changes 2,000 1,000 3,000
Number of product setups 8,000 6,000 14,000

Last year's manufacturing support costs:
COST POOL ACTIVITY COSTS
Handling 3,000,000
Number of ...

Solution Summary

Response provides the steps of calculation for unit cost based on direct labor hours & unit cost using activity based costing.

\$2.19