Compute activity rate-predetermined overhead rate

Question

Problem: Performance Products Corporation makes two products, titanium Rims and Posts.  Data regarding the two products follow:

                               Direct      

                          Labor-Hours        Annual

                             Per Unit         Production

            Rims......    0.40          20,000 units

            Posts......    0.20          80,000 units

Additional information about the company follows:

a) Rims require $17 in direct materials per unit, and Posts require $10.

b) The direct labor wage rate is $16 per hour.

c) Rims are more complex to manufacture than Posts, and they require special equipment.

d) The ABC system has the following activity cost pools:

		Estimated
		Overhead		Activity
Activity Cost Pool	Activity Measure	Cost	Total	Rims	Posts
Machine setups	Number of setups	$21,600	180	100	80
Special processing	Machine-hours	$180,000	4,000	4,000	-
General factory	Direct Labor Hrs	$288,000	24,000	8,000	16,000
		$489,600

Required:

1. Compute the activity rate (i.e., predetermined overhead rate) for each activity cost pool.
2. Determine the unit product cost of each product according to the ABC system, including direct materials and direct labor.