2 3 EMD Corporation manufactures two products, Product S and Product W. Product W is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product S. Product W is the more complex of the two products, requiring one hour of direct labour time per unit to manufacture, compared to a half-hour of direct labour time for Product S. Product W is produced on an automated production line. Overhead is currently assigned to the products on the basis of direct labour hours. The company estimated it would incur $500,000 in manufacturing overhead costs and produce 10,000 units of Product W and 60,000 units of Product S during the current year. Unit cost for materials and direct labour are: Product S Product W Direct materials $10 Direct labour $8 $24 $12 Required: a) Compute the predetermined overhead rate under the current method of allocation, and determine the unit product cost of each product for the current year. b) The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Activity Cost Pool Expected Activity Estimated Overhead Cost Product S Product W Total 1,200 2,000 Machine setups required $200.00 800 3 Direct materials Direct labour 324 $8 $12 Required: a) Compute the predetermined overhead rate under the current method of allocation, and determine the unit product cost of each product for the current year. b) The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Activity Cost Pool Machine setups required Purchase orders issued Expected Activity Estimated Overhead Cost Product S Product W Total $200,00 43,500 Machine hours required 104,000 Maintenance requests issued 152,500 800 1,200 2,000 500 100 600 3,000 10,000 13,000 860 1,140 2,000 Total $500,000 Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year