Question

Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two...

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 ?????

Homework Answers

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
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