Murphy Corporation manufactures two models of ultra-high fidelity speakers, the
ID: 2351377 • Letter: M
Question
Murphy Corporation manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the two products follow:
Additional information about the company follows:
Model X200 requires $100 in direct materials per unit, and Model X99 requires $60.
The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products.
Model X200 is more complex to manufacture than Model X99 and requires the use of special equipment. Consequently, the company is considering the use of activity-based costing to assign manufacturing overhead cost to products. Three activity cost pools have been identified as follows:
Expected Activity
Direct Labor-Hours per Unit Annual Production Total Direct
Labor-Hours Model X200 2.5 1,000 units 2,500 Model X99 1.2 10,000 units 12,000 14,500
Explanation / Answer
solution a. Predetermined overhead rate $ 142541per DLH b. the unit product cost of each model. Model X200 96500 $ Model X99 54922 $
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