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Ellix Company manufactures two models of ultra - high fidelity speakers - the 2 0 0 model and the 9 9 model. Data regarding the
Ellix Company manufactures two models of ultrahigh fidelity speakersthe model and the model. Data regarding the two
products follow:
Additional information about the company follows:
a Model requires $ in direct materials per unit, and model requires $
b The direct labor workers are paid $ per hour.
c The company has always used direct laborhours as the allocation base for applying manufacturing overhead cost to products.
d Model is more complex to manufacture than model and requires the use of special equipment.
e Because of the special work required in d above, the company is considering the use of activitybased absorption costing to apply
manufacturing overhead cost to products. Three activity cost pools have been identified as follows:
Required:
Assume that the company continues to use direct laborhours as the allocation base for applying overhead cost to products.
a Compute the plantwide predetermined overhead rate.
b Compute the unit product cost of each model.
Assume that the company decides to use activitybased absorption costing to apply overhead cost to products.
a Compute the activity rate for each activity cost pool and determine the amount of overhead cost that would be applied to each
model using the activitybased approach.
b Compute the unit product cost of each model.
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