Cassidy Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to...
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Accounting
Cassidy Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, VIP and Kommander, about which it has provided the following data:
VIPKommanderDirect materials per unit$27.50$62.10Direct labor per unit$15.60$52.00Direct labor-hours per unit0.602.00Annual production41,60016,600
The company's estimated total manufacturing overhead for the year is $3,389,664 and the company's estimated total direct labor-hours for the year is 58,160.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Activities and Activity MeasuresEstimated Overhead CostAssembling products (DLHs)$1,550,000Preparing batches (batches)493,504Product support (product variations)1,346,160Total$3,389,664
