I need some help with this problem to get me ready for a test. P13.16.
LO 9
Activity-based costing versus traditional overhead allocation methods.
Woodruff Industries manufactures and sells custom-made coffee tables.
Its job costing system was designed using an activity-based costing
approach. Direct materials and direct labor costs are accumulated
separately, along with information concerning three manufacturing
overhead cost drivers (activities). Assume that the direct labor rate
is $15 per hour and that there were no beginning inventories. The
following information was available for 2004, based on an expected
production level of 50,000 units for the year:

Activity Cost Drivers=Material handling; Cutting and lathe work;
Assembly and inspection.

2004 Budgeted Cost for each cost driver respectfully=$ 250,000;
1,750,000; 4,000,000.

Cost driver used as allocation base respectfully= Number of parts
used; Number of parts used; Direct labor hours.

Cost allocation rate respectfully=$ 0.20 per part;1.40 per part; 20.00 per hour

The following production, costs, and activities occurred during the
month of July: Units Produced=3200; Direct Materials Costs=$107,000;
Number of parts used=70,400; Direct labor hours=13,120.

Required:
a. Calculate the total manufacturing cost and the cost per unit of the
coffee tables produced during the month of July (using the
activity-based costing approach).

b. Assume instead that Woodruff Industries applies manufacturing
overhead on a direct labor hours basis (rather than using the
activity-based costing system described above). Calculate the total
manufacturing cost and the cost per unit of the coffee tables produced
during the month of July. (Hint: You will need to calculate the
predetermined overhead application rate using the total budgeted
overhead costs for 2004.)

c. Compare the per unit cost figures calculated in parts (a) and (b)
above.  Which approach do you think provides better information for
manufacturing managers? Explain your answer.