Homework answers / question archive / DFC Inc

DFC Inc

Accounting

Share With

DFC Inc. has budgeted manufacturing overhead costs of $2,195,000. It has allocated overhead on a plant-wide basis to its two products (Soft Wood and Hard Wood) using machine hours, which are estimated to be 109,000 for the current plat.. The company has decided to experiment with activity based costing and has created five activity cost pools and related activity cost drivers as follows: 
Activity Centre Cost Driver Estimated Overhead Expected Activity Material Handling Number of moves $250,000 29,000 moves Purchase Orders Number of orders $235,000 3,850 orders Product Testing Number of tests $440,000 7,250 tests Machine Set-up Number of set-ups $520,000 6,700 set-ups Machining Machine hours $750,000 75,500 machine hours 
Each unit of the products requires the following: 
Soft Wood Hard Wood Direct Material Costs $270 $195 Direct Labour Costs $150 $55 Purchase Orders 3 4 Machine Set-up 2 7 Product Testing 5 7 Machining 40 60 Material Handling 5 6 
Required: 
1. Under traditional costing using machine hours, calculate the total manufacturing cost per unit of both products. 2. Calculate the total manufacturing cost per unit for both products under ABC.