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  3. 1. al maha company uses an overhead costing system

1. Al Maha Company uses an overhead costing system based on direct labor hours for...

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Accounting

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1. Al Maha Company uses an overhead costing system based on direct labor hours for its two products X and Z. The company is considering adopting an activity-based costing system. The information is provided below for the month of April: Cost Pool Machine setup Engineering change order Facility rent Overhead cost $60,000 $40,000 $90,000 Total activity 1,000 setups 100 orders 1,000 sq. feet Product X Product Z Production units 20000 units 2000 units Direct Materials cost per unit $50 $40 Direct Labor cost per hour $10 $10 Direct Labor hours 34,000 hours 6,000 hours Machine setup 300 setups 700 setups Engineering change order 20 orders 80 orders Facility rent 300 sq. feet 700 sq. feet Required: [ 9 marks] 1. Calculate total cost assigned to each product using a volume-based costing system based on direct labor hours. [ 3 marks] 2. Calculate the manufacturing cost per unit for each product under the activity-based costing system. [ 6 marks]

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