Question

Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:

   

	Direct Labor-Hours per unit	Annual Production
Rims	0.70	22,000 units
Posts	0.70	79,000 units

   

Additional information about the company follows:

a. Rims require $17 in direct materials per unit, and Posts require $14.

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
Activity Cost Pool	Activity Measure	Estimated Overhead Cost		Rims	Posts	Total
Machine setups	Number of setups	$	27,650	80	120	200
Special processing	Machine-hours	$	119,290	1,000	0	1,000
General factory	Direct labor-hours	$	616,000	8,000	36,000	44,000

4.

value:
5.00 points

Required information

Required:
1.	Compute the activity rate for each activity cost pool. (Round your final answers to 2 decimal places.)

References

eBook & Resources

WorksheetLearning Objective: 03-02 Compute activity rates for an activity-based costing system.

Difficulty: 2 MediumLearning Objective: 03-03 Compute product costs using activity-based costing.

Check my work

5.

value:
5.00 points

Required information

2.	Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)

Answer 1

1)	Activity rates
	Activity cost pool		Estimated	total	activity
			oh cost		rate
			(A)	(B)	C=A/B
	Machine setups		27,650	200	138.25	per setup
	Special processing		119,290	1,000	119.29	per machine hr
	General factory		616,000	44,000	14	per DLH's
2)	unit product cost
	RIMS
						total	per unit
	Direct materials		(22000*17)			374000	17
	Direct labor		(22000*.7)*19			292600	13.3
	overhead
	Machine setups		(80*138.25)			11060
	Special processing		(1,000*119.29)			119290
	General factory		(8000*14)			112000
	total overhead cost					242350	11.02
	total product cost (A)					908950
	total units produced (B)					22,000
	unit product cost C = A/B					41.32	41.32	answer
	POSTS
	Direct materials		(79000*14)			1106000	14
	Direct labor		(79000*.7)*19			1050700	13.3
	overhead
	Machine setups		(120*138.25)			16590
	Special processing		(1,000*0)			0
	General factory		(36000*14)			504000
	total overhead cost					520590	6.589747
	total product cost (A)					2677290
	total units produced (B)					79,000
	unit product cost C = A/B					33.89	33.88975
						RIMS	POSTS
	Direct materials					17	14
	direct labor					13.3	13.3
	overhead					11.02	6.59
	unit cost					41.32	33.89