Elle Company manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the two products follow:

Product X200 X99

Direct labor hours 1.80 DLHs per unit 0.90 DLHs per unit

Annual production 5,000 units 30,000 units

Total direct labor hours 9,000 DLHs 27,000 DLHs

Additional information about the company follows:

The selling price of Model X200 and X99 are set at 24 percent of gross profit.

Model X200 requires $72 in direct materials per unit, and model X99 requires $50.

The direct labor rate is $10 per hour.

The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products.

ModelX200 is more complex to manufacture than model X99 and requires the use of special equipment.

Because of the special work required in (4) above, the company is considering the use of activity- based costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows:

Activity cost pool Machine setups Special processing General factory

Required:

Activity measure Number of setups Machine-hours Direct labor-hours

Total costs $360,000 180,000 1,260,000 1,800,000

Model X200 50 12,000 9,000

Model X99 100 0 27,000

Expected Activity

a. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products.

Compute the predetermined overhead rate.

Compute the unit product cost of each model.

Compute the unit selling price of each model in 2 decimal places.

(2 marks) (6 marks) (4 marks)

b. Assume that the company decides to use activity-based costing to apply overhead cost to products.

Compute the activity rate for each activity cost pool. (3 marks)

Compute the manufacturing overhead per unit of each model. (4 marks)

Determine the unit product cost of each model. (2 marks)

Determine the unit selling price of each model in 2 decimal places. (4 marks)

[Total: 25 marks]

Elle Company manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the two products follow: Additional information about the company follows: 1. The selling price of Model \\( \\mathrm{X} 200 \\) and \\( \\mathrm{X} 99 \\) are set at 24 percent of gross profit. 2. Model \\( \\mathrm{X} 200 \\) requires \\( \\$ 72 \\) in direct materials per unit, and model \\( \\mathrm{X} 99 \\) requires \\( \\$ 50 \\). 3. The direct labor rate is \\( \\$ 10 \\) per hour. 4. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products. 5. ModelX200 is more complex to manufacture than model \\( \\mathrm{X} 99 \\) and requires the use of special equipment. 6. Because of the special work required in (4) above, the company is considering the use of activitybased costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows: Required: a. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products. i. Compute the predetermined overhead rate. ii. Compute the unit product cost of each model. iii. Compute the unit selling price of each model in 2 decimal places. (2 marks) (6 marks) (4 marks) b. Assume that the company decides to use activity-based costing to apply overhead cost to products. i. Compute the activity rate for each activity cost pool. ii. Compute the manufacturing overhead per unit of each model. iii. Determine the unit product cost of each model. iv. Determine the unit selling price of each model in 2 decimal places. (3 marks) (4 marks) (2 marks) (4 marks)