Question

7. Ace Company manufactures two products, X and Y. The following information is given:

Data regarding the two products follow:

Product	Direct labor hours required to make 1 unit	Annual production units
X	4 hours per unit	4,000 units
Y	2 hours per unit	1,000 units

                                                                                                                                                           

Data regarding direct material and direct labor costs follow:

                                      X                                Y

Direct material cost per unit of product              $140                            $330

Direct labor cost per unit of product                     130                            80

Answer the following questions:

a. The company uses traditional costing and direct labor hours are the base for applying manufacturing

   overhead to its products. The predetermined overhead rate is given as $38 per direct labor hour.

   Determine the unit product cost of Product Y.

If the company uses activity-based costing, the company's overhead costs will be traced to two activity

cost pools. The following data are given:

                                                            

Activity cost pool	Activity measure	Estimated Overhead Cost	Activity
			Total	For X	For Y
Setup	Number of setups	$420,000	1,000 setups	200 setups	800 setups
Design	Design hours (DHs)	$270,000	900 DHs	320 DHs	580 DHs

b-1. Compute activity rate (predetermined overhead rate) for each activity cost pool.

b-1-i         Setup:

         b-1-ii       Design:

   b-2. Compute the amount of overhead cost allocated to Product X for all 4,000 units together.

   b-3. Compute the amount of overhead cost allocated to 1 unit of Product X.

   b-4. Compute the unit product cost of Product X.

(i need in 1 hr please)

Answer 1

a.

	Product Y
Direct Material	$                330
Direct Labor	$                  80
Overhead	$                  76
Total Product cost per unit	$                486

b-1 Activity Rate
Setup = $420000 / 1000 = $420 per setup
Design = $270000 / 900 = $300 per DH

b-2 & b-3

	Product X
Overhead Allocated
Setup	$          84,000
Design	$          96,000
Total	$       1,80,000
Units	4000
Overhead per unit	$                  45

b-4

	Product X
Direct Material	$                140
Direct Labor	$                130
Overhead	$                  45
Total Product cost per unit	$                315