Cabanos Company Manufactures Two Products,Product C and Product D

Essay

Cabanos Company manufactures two products,Product C and Product D.The company estimated it would incur $160,790 in manufacturing overhead costs during the current period.Overhead currently is applied to the products on the basis of direct labour hours.Data concerning the current period's operations appear below:



Required:

a) Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year.
b) The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labour hours. The activity-based costing system would use three activity cost pools. Data relating to these activities for the current period are given below:


Determine the unit product cost of each product for the current period using the activity-based costing approach.