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Enemia Company uses an overhead costing system based on direct labor hours for its two products...

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Accounting

Enemia Company uses an overhead costing system based on directlabor hours for its two products A and B. The company isconsidering adopting an activity-based costing system, and collectsthe following information for the month of October.

Product A Product B

Production units 12,000    6,000

Direct materials cost per unit $50.00    $40.00

Direct labor cost per hour $12.00    $12.00

Direct labor hours 30,000 10,000

Overhead    Overhead    Total   Activity Consumption

Cost pool cost    activity Product A Product B

Machine setup $120,000 600 setups 200    400

Engineering change order $110,000 220 orders    120100

Facility rent $120,000    2,000 sq. feet   1300 700

Required:

(1) Compute the unit manufacturing cost of each product under avolume-based costing system based on direct labor hours.

(2) Compute the unit manufacturing cost of each product underthe activity-based costing system.

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