Lionel Corporation Manufactures Two Products,Product B and Product H

Essay

Lionel Corporation manufactures two products,Product B and Product H.Product H is of fairly recent origin,having been developed as an attempt to enter a market closely related to that of Product B.Product H is produced on an automated production line.
Overhead is currently assigned to the products on the basis of direct labour hours.The company estimated it would incur $450,000 in manufacturing overhead costs and produce 7,500 units of Product H and 30,000 units of Product B during the current year.Unit costs for materials and direct labour are:


Required:

a) Compute the predetermined overhead rate under the current method of allocation, and determine the unit product cost of each product for the current year.
b) The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below:


Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year.