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Unformatted text preview: 40,000 20,000 Direct materials cost per unit $6 $10 Direct labor cost per unit $5 $5 Direct labor hours 20,000 10,000 Number of setups 100 60 Pounds of material handled 60,000 60,000 Machine hours 14,000 26,000 Required: 1. Compute the unit product cost for each product. Allocate overhead using the traditional method based on direct labor hours. 2. Compute the unit product cost using the ABC system to allocate overhead to each product. 3. Which costing system—the traditional system or the ABC system—is more accurate? Why? 4. Does the traditional system under-cost or over-cost Model R? Why? Answers to Ch. 8 Quiz 1. R=$16; P=$20 2. R=$13.9875; P=$24.025 3. ABC. When products consume resources differently, ABC lets management better understand the cost of producing different products....
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This test prep was uploaded on 04/22/2008 for the course ACC 2304 taught by Professor Robinson during the Spring '08 term at Baylor.
- Spring '08
- Managerial Accounting