Extracted text: Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: Deluxe Standard $ 57.00 $ 22.00 Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production $ 69.00 $ 27.00 0.70 DLHS 1.40 DLHS 10,000 units 50,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours $ 667,000 77,000 DLHS Required: 1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools: Expected Activity Estimated Overhead Activity Cost Pools (and Activity Measures) Supporting direct labor (direct labor-hours) Batch setups (setups) Safety testing (tests) Cost Deluxe Standard Total $ 462,000 135,000 70,000 7,000 200 70,000 100 77,000 300 30 70 100 Total manufacturing overhead cost $ 667,000 Determine the unit product costs of the Deluxe and Standard products under the activity-based absorption costing system.
Extracted text: Platinum Web Services designs and maintains websites for small business entrepreneurs. Competition has been intensifying in recent years and the company has been losing business to larger web design firms. Summary data concerning the last two years of operations follow: Last Year This Year 1,400 $ Estimated hours of service demanded 1,150 110,000 1,050 110,000 2,200 $ 110,000 1,300 $ Estimated overhead cost Actual hours of service provided Actual overhead cost incurred $ 110,000 2,200 Hours of service available at capacity The company applies its overhead costs to jobs using the hours of service provided as the allocation base. For example, this year and last year, 37 service-hours were required to maintain the website for a small company called Verde Consulting. All of Platinum's overhead costs are fixed, and the actual overhead cost incurred was exactly as estimated at the beginning of the year in last year and this year. Required: 1. Platinum Web Services computes its predetermined overhead rate at the beginning of each year based on the estimated overhead cost and the estimated hours of service demanded for the year. Using this approach, how much overhead would have been applied to the Verde Consulting job last year? How about this year? 2. The president of Platinum Web Services has heard that some companies in the industry have changed to a system of computing the predetermined overhead rate based on the hours of service available at capacity. He would like to know what effect this method would have on job costs. How much overhead cost would have been applied to the Verde Consulting job last year using this method? How much would have been applied this year? 3. If Platinum computes its predetermined overhead rate based on the hours of service available at capacity as in (2) above, how much unused capacity cost would the company have incurred last year? This year?