Answer:
1) applying traditional costing
cost per unit for mercon = $98
cost per unit for wurcon = $297
2) applying ABC costing
cost per unit for mercon = $218
cost per unit for wurcon = $237
Explanation:
Mercon Wurcon
Cost of direct materials per unit $8.00 $6.00
Cost of direct labor per unit $10.00 $11.00
Hours of direct labor per unit 2.00 7.00
applied overhead rate $80 $280
Total units produced 1,000 2,000
applied overhead rate = total overhead / total direct labor hours = $640,000 / 16,000 = $40
cost per unit for mercon = $8 + $10 + $80 = $98
cost per unit for wurcon = $6 + $11 + $280 = $297
with ABC costing, the overhead rate is just 50%
Mercon Wurcon
Cost of direct materials per unit $8.00 $6.00
Cost of direct labor per unit $10.00 $11.00
Hours of direct labor per unit 2.00 7.00
applied overhead rate $40 $140
Total units produced 1,000 2,000
total costs of engineering $160,000 $160,000
engineering cost by unit $160 $80
engineering cost per unit = $320,000 / 2,000 = $160
cost per unit for mercon = $8 + $10 + $40 + $160 = $218
cost per unit for wurcon = $6 + $11 + $140 + $80 = $237
