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