Cabio Company Manufactures Two Products, Product C and Product D

Essay

Cabio Company manufactures two products, Product C and Product D.The company estimated it would incur $119,100 in manufacturing overhead costs during the current period.Overhead currently is applied to the products on the basis of direct labor-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 labor-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.