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Asked by Kayli Swigart on Jun 25, 2024

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Thingvold, Inc., manufactures and sells two products: Product W8 and Product T0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: Thingvold, Inc., manufactures and sells two products: Product W8 and Product T0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $24.80 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours.Compute the company's predetermined overhead rate under this costing method. b.How much overhead would be applied to each product under the company's traditional costing method? c.Determine the unit product cost of each product under the company's traditional costing method. d.Compute the activity rates under the activity-based costing system. e.Determine how much overhead would be assigned to each product under the activity-based costing system. f.Determine the unit product cost of each product under the activity-based costing method. g.What is the difference between the overhead per unit under the traditional costing method and the activity-based costing system for each of the two products? h.What is the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products? The direct labor rate is $24.80 per DLH.The direct materials cost per unit for each product is given below: Thingvold, Inc., manufactures and sells two products: Product W8 and Product T0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $24.80 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours.Compute the company's predetermined overhead rate under this costing method. b.How much overhead would be applied to each product under the company's traditional costing method? c.Determine the unit product cost of each product under the company's traditional costing method. d.Compute the activity rates under the activity-based costing system. e.Determine how much overhead would be assigned to each product under the activity-based costing system. f.Determine the unit product cost of each product under the activity-based costing method. g.What is the difference between the overhead per unit under the traditional costing method and the activity-based costing system for each of the two products? h.What is the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products? The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Thingvold, Inc., manufactures and sells two products: Product W8 and Product T0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $24.80 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours.Compute the company's predetermined overhead rate under this costing method. b.How much overhead would be applied to each product under the company's traditional costing method? c.Determine the unit product cost of each product under the company's traditional costing method. d.Compute the activity rates under the activity-based costing system. e.Determine how much overhead would be assigned to each product under the activity-based costing system. f.Determine the unit product cost of each product under the activity-based costing method. g.What is the difference between the overhead per unit under the traditional costing method and the activity-based costing system for each of the two products? h.What is the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products? Required:
In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent.
a.The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours.Compute the company's predetermined overhead rate under this costing method.
b.How much overhead would be applied to each product under the company's traditional costing method?
c.Determine the unit product cost of each product under the company's traditional costing method.
d.Compute the activity rates under the activity-based costing system.
e.Determine how much overhead would be assigned to each product under the activity-based costing system.
f.Determine the unit product cost of each product under the activity-based costing method.
g.What is the difference between the overhead per unit under the traditional costing method and the activity-based costing system for each of the two products?
h.What is the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products?

Traditional Costing Method

An accounting approach that assigns manufacturing overhead costs to products based on volume-related measures such as direct labor hours or machine hours.

Activity-Based Costing

An accounting methodology that assigns costs to products or services based on the activities that go into producing them, aiming for more accurate allocation of overhead costs.

  • Compute the expense per unit utilizing the traditional cost allocation method.
  • Determine the unit cost of products through the application of the activity-based costing (ABC) approach.
  • Acquire knowledge on how traditional costing methods differ from activity-based costing strategies.
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SK
Shreyas KumbharJun 27, 2024
Final Answer :
a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded)
b.Computation of overhead applied to each product: a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded) b.Computation of overhead applied to each product: c.Computation of traditional unit product costs: d.Computation of activity rates: e.Computation of the overhead cost per unit under activity-based costing. f.Computation of unit product costs under activity-based costing. g.The difference in overhead per unit is: h.The difference in unit product costs is: The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65. The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37. Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods. c.Computation of traditional unit product costs: a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded) b.Computation of overhead applied to each product: c.Computation of traditional unit product costs: d.Computation of activity rates: e.Computation of the overhead cost per unit under activity-based costing. f.Computation of unit product costs under activity-based costing. g.The difference in overhead per unit is: h.The difference in unit product costs is: The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65. The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37. Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods. d.Computation of activity rates: a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded) b.Computation of overhead applied to each product: c.Computation of traditional unit product costs: d.Computation of activity rates: e.Computation of the overhead cost per unit under activity-based costing. f.Computation of unit product costs under activity-based costing. g.The difference in overhead per unit is: h.The difference in unit product costs is: The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65. The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37. Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods. e.Computation of the overhead cost per unit under activity-based costing. a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded) b.Computation of overhead applied to each product: c.Computation of traditional unit product costs: d.Computation of activity rates: e.Computation of the overhead cost per unit under activity-based costing. f.Computation of unit product costs under activity-based costing. g.The difference in overhead per unit is: h.The difference in unit product costs is: The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65. The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37. Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods. f.Computation of unit product costs under activity-based costing. a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded) b.Computation of overhead applied to each product: c.Computation of traditional unit product costs: d.Computation of activity rates: e.Computation of the overhead cost per unit under activity-based costing. f.Computation of unit product costs under activity-based costing. g.The difference in overhead per unit is: h.The difference in unit product costs is: The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65. The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37. Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods. g.The difference in overhead per unit is: a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded) b.Computation of overhead applied to each product: c.Computation of traditional unit product costs: d.Computation of activity rates: e.Computation of the overhead cost per unit under activity-based costing. f.Computation of unit product costs under activity-based costing. g.The difference in overhead per unit is: h.The difference in unit product costs is: The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65. The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37. Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods. h.The difference in unit product costs is: a.Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours = $1,023,334 ÷ 8,300 DLHs = $123.29 per DLH (rounded) b.Computation of overhead applied to each product: c.Computation of traditional unit product costs: d.Computation of activity rates: e.Computation of the overhead cost per unit under activity-based costing. f.Computation of unit product costs under activity-based costing. g.The difference in overhead per unit is: h.The difference in unit product costs is: The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65. The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37. Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods. The unit product cost of Product W8 under traditional costing is less than its unit product cost under activity-based costing by $104.65.
The unit product cost of Product T0 under traditional costing is greater than its unit product under activity-based costing by $65.37.
Note that these differences in unit product costs are entirely explained by the differences in overhead costs between the two methods.

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