Question :
MC Qu. 5 Shininger Manufacturing Corporation has a traditional...
Shininger Manufacturing Corporation has a conventional 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, W21K and G27U, about which it has provided the subsequent data:
G27U W21K
Direct materials per unit $29.50 $60.80
Direct labor per unit $7.00 $30.00
Direct labor-hours per unit 0.20 1.00
Annual production 48,400 16,100
The company's evaluated total manufacturing overhead for the year is $1,587,876 and the company's estimated net direct labor-hours for the year is 25,780.
The company is considering using a variation of activity-based costing to evaluate its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Activities and Activity Measures Estimated Overhead Cost
Supporting direct labor hours (DLHs) $773,400
Setting up machines (setups) 437,708
Parts administration (part types) 376,768
Total $ 1,587,876
Expected Activity
G27U W21K Total
DLHs 9,680 16,100 25,780
Setups 1,970 1,028 2,998
Part types 653 275 928
The manufacturing overhead that could be applied to a unit of product G27U under the company's traditional costing system is closest to:
$23.85
$7.31
$15.84
$12.32