Mathias Company manufactures a number of specialized machine parts. Part Bunkka-22 uses $35 of direct materials and $15 of direct labor per unit.
Mathias' estimated manufacturing overhead is as follows:
| Materials handling |
|
$100,000 |
| Machining |
|
200,000 |
| Factory supervision |
|
150,000 |
| Total |
|
$450,000 |
Overhead is applied based on direct labor costs, which were estimated at $200,000.
Mathias is considering adopting activity-based costing. The cost drivers are estimated at:
|
Activity
|
|
Cost Driver
|
|
Expected Use
|
| Materials handling |
|
Weight of materials |
|
50,000 |
pounds |
| Machining |
|
Machine hours |
|
20,000 |
hours |
| Factory supervision |
|
Direct labor hours |
|
12,000 |
hours |
(a) Compute the cost of 1,000 units of Bunkka-22 using the current traditional costing system.
| Total cost of Bunkka-22 |
|
:?? |
(b) Compute the cost of 1,000 units of Bunkka-22 using the proposed activity-based costing system. Assume the 1,000 units use 2,500 pounds of materials, 500 machine hours, and 1,000 direct labor hours. (Round intermediate calculations to 2 decimal places, e.g. 1.25.)
| Total cost of Bunkka-22 |
|
$ ?? |