VG Company has identified the following cost pools and cost drivers

Cost pools Activity cost Cost drivers

Machine set up $ 360,000 6,000 setup hours
Material handling 100,000 50,000 pounds of material
Design changes 22,500 3,000 number of design hours
Electric power 40,000 80,000 Kilowatt- hours
The following information pertains to the production V203 and G 179 , both
produces need 2 direct labor hours
Item V 203 G 179
Number of units produced 5000 15000
Direct material cost $ 250,000 $330,000
Direct labor cost $ 140,000 $ 150,000
Number of setup hours 2,500 3,500
Number of design hours 100 300
Pounds of material used 12500 37500
Kilowatt- hours 2,000 2,000
Required : Determine the unit cost for each of the two products using
1- Traditional method , if F.O .H allocated based on direct labor hours .
2- Activity based costing
Q2/ The cordless phone manufacturing division of a consumer electronics company
uses activity-based accounting. For simplicity, assume that its accountants have
identified only the following three activities and related cost drivers for
manufacturing overhead:

Required : Determine the unit cost for each of the two products using
1- Traditional method , if F.O .H allocated based on direct labor cost .
2- Activity based costing

EX 1: Following are data related to three products manufactured by a company.

Product X Product Y Product Z Total
Production and sales (Units) 30,000 20,000 8,000 58,000
Row material used ( Kg) 5 5 11
Direct Material cost per unit $25 $20 $11 $1,238,000
Direct Labor Hours 1.20 2 1 88,000
Machine Hours 1.20 1 2 76000
Direct Labor Hours per unit $8 $ 12 $6 $ 26
Number of production Runs 3 7 20 30
Number of Deliveries 9 3 20 32
Number of Receipts 15 35 220 270
Number of production Order 15 10 25 50
Overhead Cost
Set up $ 3,0000
Machines $ 760,000
Receiving $435,000
Packing 250,000
Engineering 373,000
From the above information you are required
1- Compute the product cost using traditional costing system recovering
overheads on the bases of direct labor hours
2- Compute the product cost using activity based costing (ABC)