Traditional Costing System

Jonson and Associates Manufacturing Corporation has a traditional 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, B21P and O11L, about which it has provided the following data:

	B21P	O11L
Direct materials per unit	$21.10	$47.30
Direct labor per unit	$16.80	$37.80
DLHs per unit	0.80	1.80
Annual production	45,000	10,000

The Company's estimated total manufacturing overhead for the year is $2,870,100 and the company's estimated total direct labor-hours for the year is 54,000.

The company is considering using a variation of ABC to determine its unit product costs for external reports. Data for this proposed ABC system appear below:

Activities and Activity Measures	Estimated Overhead Cost
Assembling products (DLHs)	$1,404,000
Preparing batches (batches)	429,300
Milling (MHs)	1,036,800
Total	$2,870,100

Activities	B21P	O11L	Total
Assembling products (DLHs)	36,000	18,000	54,000
Preparing batches (batches)	972	1,890	2,862
Milling (MHs)	1,728	864	2,592

On the basis of the given data, complete the following:

· Determine the unit product cost of each of the company's two products under the traditional costing system.

· Determine the unit product cost of each of the company's two products under ABC system.