2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: Estimated Overhead Activity Deluxe Total Regular Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Cost 151,800 900 1,400 309,000 350,000 1,000 500 5,000 16,000 12,500 1,050,000 26,000 $1,860,800 I Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Cost Pool Activity Rate Purchase orders per order Rework requests per request Product testing per test Machine related per MH $ 2,300 1,500 17,500 42,000

Siegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that $1,860,800 in overhead costs would be incurred and the company would produce and sell 5,000 units of the deluxe model and 23,968 units of the regular model. The deluxe model requires 2.3 hours of direct labour time per unit, and the regular model requires 1.5 hours. Materials and labour costs follow: Deluxe Regular Direct materials cost per unit $115 $83 Direct labour cost per hour 20 15 Required: 1. Compute the predetermined overhead rate using direct labour-hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Predetermined overhead rate per DLH Unit product cost of Deluxe Unit product cost of Regular