Required: 1. Compute the activity rate for each activity cost pool. (Round your

Question

Required: 1. Compute the activity rate for each activity cost pool. (Round your final answers to 2 decimal places.) 2. Determine the unit product cost of each product according to the ABC system. Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Direct Annual Production 21,000 units 80,000 units Labor-Hours Rims Posts per unit 0.30 0.80 Additional information about the company follows: a. Rims require $13 in direct materials per unit, and Posts require $9 b. The direct labor wage rate is $19 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 Estimated Overhead Cost $ 28,800 Activity Cost Pool Machine setups Special processing General factory Activity Measure Rims Posts Total 90 $128,800 4,000 110 0 200 4,000 63,000 Number of setups Machine-hours 1,008,000 Direct labor-hours 3,000 60,000

Explanation / Answer

Qty Activity Rate Machine Setup 28800 200 144 Special Processing 128800 4000 32.20 Genereal factory 1008000 63000 16 1165600 Allocation of Factory overhead Activity Rate Rim Posts Rim Posts TOTAL Machine Setup 144 90 110 $     12,960.00 $     15,840.00 $       28,800.00 Special Processing 32.2 4000 0 $ 1,28,800.00 $    1,28,800.00 Genereal factory 16 3000 60000 $     48,000.00 $ 9,60,000.00 $ 10,08,000.00 $ 1,89,760.00 $ 9,75,840.00 $ 11,65,600.00 RIM POST Production Cost Direct Material 273000 720000 Direct Labor 119700 1216000 Factory Overhead $                           1,89,760.00 $    9,75,840.00 TOTAL COST $                           5,82,460.00 $ 29,11,840.00 No Of Unit Produced 21000 80000 UNIT COST 27.74 36.40

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