Parody, Inc

Essay

Parody, Inc., manufactures and sells two products: Product W5 and Product V5. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $16.30 per DLH. The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required:
In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent.
a. The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours. Compute the company's predetermined overhead rate under this costing method.
b. How much overhead would be applied to each product under the company's traditional costing method?
c. Determine the unit product cost of each product under the company's traditional costing method.
d. Compute the activity rates under the activity-based costing system.
e. Determine how much overhead would be assigned to each product under the activity-based costing system.
f. Determine the unit product cost of each product under the activity-based costing method.