Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:
|
Direct
Labor-Hours
per unit |
Annual
Production |
| Rims |
0.40 |
22,000 units |
| Posts |
0.20 |
84,000 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 $17 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 |
Activity |
|
|
|
|
|
|
|
| Activity Cost Pool |
Activity Measure |
Estimated
Overhead
Cost |
Rims |
Posts |
Total |
| Machine setups |
Number of setups |
$ |
22,000 |
99 |
85 |
184 |
| Special processing |
Machine-hours |
$ |
190,000 |
4,500 |
0 |
4,500 |
| General factory |
Direct labor-hours |
$ |
269,000 |
8,800 |
16,800 |
25,600 |
|
1.Compute the activity rate for each activity cost pool.
| Activity Cost Pool |
Activity Rate |
| Machine setups |
$ |
per setup |
| Special processing |
$ |
per MH |
| General factory |
$ |
per DLH |
2.Determine the unit product cost of each product according to the ABC system.
|
|
| Unit product cost of Rims |
$ |
| Unit product cost of Posts |
$ |