Swenson Company manufactures 4,000 units of Deluxe Product and 20,000 units of Regular Product each year.The company currently uses direct labor-hours to assign overhead cost to products.The pre-determined overhead rate is: $\frac{\text { Manufacturing overhead cost}}{\text {Direct labor hours }}=\$ 20 / \mathrm{DLH}$ Suppose, however, that factory overhead costs are actually caused by the five activities listed below: Also suppose the following transaction data has been collected: Required:
Using the activity-based costing method to calculate unit costs of Deluxe and Regular products, and compare them with the current direct labor hours-based costing system.

Question

Swenson Company manufactures 4,000 units of Deluxe Product and 20,000 units of Regular Product each year.The company currently uses direct labor-hours to assign overhead cost to products.The pre-determined overhead rate is: $\frac{\text { Manufacturing overhead cost}}{\text {Direct labor hours }}=\$ 20 / \mathrm{DLH}$  Suppose, however, that factory overhead costs are actually caused by the five activities listed below:  Also suppose the following transaction data has been collected:  Required:
Using the activity-based costing method to calculate unit costs of Deluxe and Regular products, and compare them with the current direct labor hours-based costing system.

Quizplus · Accepted Answer

The Answer of Swenson Company manufactures 4,000 units of Deluxe Product and 20,000 units of Regular Product each year.The company currently uses direct labor-hours to assign overhead cost to products.The pre-determined overhead rate is: $\frac{\text { Manufacturing overhead cost}}{\text {Direct labor hours }}=\$ 20 / \mathrm{DLH}$  Suppose, however, that factory overhead costs are actually caused by the five activities listed below:  Also suppose the following transaction data has been collected:  Required:
Using the activity-based costing method to calculate unit costs of Deluxe and Regular products, and compare them with the current direct labor hours-based costing system.

Swenson Company Manufactures 4,000 Units of Deluxe Product and 20,000 Manufacturing overhead costDirect labor hours =$20/DLH\frac{\text { Manufacturing overhead cost}}{\text {Direct labor hours }}=\$ 20 / \mathrm{DLH}Direct labor hours Manufacturing overhead cost​=$20/DLH

Swenson Company Manufactures 4,000 Units of Deluxe Product and 20,000 $\frac{\text { Manufacturing overhead cost}}{\text {Direct labor hours }}=\$ 20 / \mathrm{DLH}$