Answer:
1) using conventional costing
unit cost mercon = $98
unit cost wurcon = $297
2) using ABC costing
unit cost mercon = $218
unit cost wurcon = $237
Explanation:
Mercon Wurcon
Direct materials cost per unit $8.00 $6.00
Direct labor cost per unit $10.00 $11.00
Direct labor-hours per unit 2.00 7.00
overhead rate applied $80 $280
Number of units produced 1,000 2,000
overhead rate = total overhead / total direct labor hours = $640,000 / 16,000 = $40
unit cost mercon = $8 + $10 + $80 = $98
unit cost wurcon = $6 + $11 + $280 = $297
using the ABC costing, overhead rate is only 50%
Mercon Wurcon
Direct materials cost per unit $8.00 $6.00
Direct labor cost per unit $10.00 $11.00
Direct labor-hours per unit 2.00 7.00
overhead rate applies $40 $140
Number of units produced 1,000 2,000
total engineering costs $160,000 $160,000
engineering cost per unit $160 $80
engineering cost per unit = $320,000 / 2,000 = $160
unit cost mercon = $8 + $10 + $40 + $160 = $218
unit cost wurcon = $6 + $11 + $140 + $80 = $237
