1. The company's estimated direct labour-hours (DLHS) follows: Deluxe model: units x 1.6 DLH per unit. Regular model: units x DLH per unit Total direct labour-hours..... Using direct labour-hours, the predetermined overhead rate would be: $6,000,000 - $ _per direct labour hour The unit product cost of each model using the company's traditional costing system would be: TRADITIONAL ACTIVITY Deluxe Regular Deluxe Regular Direct materials ..... $154 $112 $154 $112 Direct labour ......... 16 8 16 8 Manufacturing overhead: Total unit product cost.... .... 2. Predetermined overhead rates are computed below: (a) Estimated (b) Overhead Expected Activity Cost Pool Cost Activity Purchase orders ....... $252,000 purchase orders Scrap/rework orders. $648,000 scrap/rework orders Product testing ........ $1,350,000 15,000 tests Machine related....... $3,750,000 50,000 MHS (a) (b) Predetermined Overhead Rate $ per purchase order $ _per scrap/ rework order $90 per test $75 per MH TOTAL 3. a. The overhead applied to each product can be determined as follows: (a) (b) Overhead Applied The Deluxe Model Activity Cost Pool Purchase orders.......... Scrap/rework orders...... Product testing ..... Machine related Total overhead cost (a).. Number of units produced (b). Overhead cost per unit (a) = (b)....... (a) Predetermined Overhead Rate per PO per order $90 per test $75 per MH (b) Activity 400 POS orders 6,000 tests MHS 540,000 (a) (b) Overhead Applied The Regular Model Activity Cost Pool Purchase orders............ Scrap/rework orders....... Product testing ...... Machine related Total overhead cost (a). Number of units produced (b).... Overhead cost per unit (a) = (b)... (a) Predetermined Overhead Rate per PO per order $90 per test $75 per MH (b) Activity POS orders tests 30,000 MHS 2,250,000 .. 120,000 1. The company's estimated direct labour-hours (DLHS) follows: Deluxe model: units x 1.6 DLH per unit. Regular model: units x DLH per unit Total direct labour-hours..... Using direct labour-hours, the predetermined overhead rate would be: $6,000,000 - $ _per direct labour hour The unit product cost of each model using the company's traditional costing system would be: TRADITIONAL ACTIVITY Deluxe Regular Deluxe Regular Direct materials ..... $154 $112 $154 $112 Direct labour ......... 16 8 16 8 Manufacturing overhead: Total unit product cost.... .... 2. Predetermined overhead rates are computed below: (a) Estimated (b) Overhead Expected Activity Cost Pool Cost Activity Purchase orders ....... $252,000 purchase orders Scrap/rework orders. $648,000 scrap/rework orders Product testing ........ $1,350,000 15,000 tests Machine related....... $3,750,000 50,000 MHS (a) (b) Predetermined Overhead Rate $ per purchase order $ _per scrap/ rework order $90 per test $75 per MH TOTAL 3. a. The overhead applied to each product can be determined as follows: (a) (b) Overhead Applied The Deluxe Model Activity Cost Pool Purchase orders.......... Scrap/rework orders...... Product testing ..... Machine related Total overhead cost (a).. Number of units produced (b). Overhead cost per unit (a) = (b)....... (a) Predetermined Overhead Rate per PO per order $90 per test $75 per MH (b) Activity 400 POS orders 6,000 tests MHS 540,000 (a) (b) Overhead Applied The Regular Model Activity Cost Pool Purchase orders............ Scrap/rework orders....... Product testing ...... Machine related Total overhead cost (a). Number of units produced (b).... Overhead cost per unit (a) = (b)... (a) Predetermined Overhead Rate per PO per order $90 per test $75 per MH (b) Activity POS orders tests 30,000 MHS 2,250,000 .. 120,000
