70.2K

Verified Solution

Link Copied!

Question 3 International Steel Company has budgeted manufacturing overhead costs of $1,955,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours, which are estimated to be 100,000 for the current year. 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 Estimated Activity Material handling Number of moves $280,000 40,000 moves Purchase orders Number of orders $105,000 1,400 orders Product testing Number of tests $440,000 4,000 tests Machine set-up Number of set-ups $320,000 5,000 set-ups Machining Machine hours $810,000 100,000 machine hours Each unit of the products requires the following: Soft Steel Hard Steel Direct materials costs $300 $200 Direct labour costs $120 $60 Purchase orders 2 3 Machine set-up 5 10 Product testing 3 4 Machining 60 60 Material handling 4 6

(a) Your answer is incorrect. Try again. Under traditional product costing using machine hours, calculate the total manufacturing cost per unit of both products. (Round answers to 0 decimal places, e.g. 1525.) Soft Steel Hard Steel Total manufacturing cost per unit $ $

Answer & Explanation Solved by verified expert

See Answer