Question

Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:

	Direct Labor-Hours per Unit	Annual Production
Rims	0.30	21,000 Units
Post	0.50	74,000 Units

Additional information about the company follows: Rims require $15 in direct materials per unit, and Posts require $12. The direct labor wage rate is $16 per hour. Rims are more complex to manufacture than Posts and they require special equipment.

The ABC system has the following activity cost pools:

Activity Cost Pool	Activity Measure	Estimated overhead cost	Rims	Posts	Totals
Machine Setups	Number of Setups	$ 37,000	120	280	400
Special Processing	Machine-hours	$ 146,520	4,000	0	4,000
General Factory	Direct-Labor-Hours	$ 672,000	10,000	32,000	42,000

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

Activity Cost Pool		Activity Rate
Machine Setups	?	Per Setup
Special Processing	?	Per MH
General Factory	?	Per DHL

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

Unit Product Cost of Rims	?????
Unit Cost of Post	?????

Answer 1

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

Activity Cost Pool		Activity Rate
Machine Setups	37000/400 = 92.50	Per Setup
Special Processing	146520/4000 = 36.63	Per MH
General Factory	672000/42000 = 16	Per DHL

2) Calculate unit product cost

	Rims	Post
Machine setup	120*92.50 = 11100	25900
Special processing	146520	0
General factory	10000*16 = 160000	512000
Total	317620	537900
Unit	21000	74000
Overhead cost per unit	15.12	7.27
Direct material	15	12
Direct labor	16*.30 = 4.8	8
Unit product cost	34.92	27.27