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Ellix Company manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the two products follow: Product Direct Labor-Hours

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

Product Direct Labor-Hours Annual Production Total Direct Labor-Hours
X200 0.2 DLH per unit 16,000 units 3,200 DLHs
X99 0.4 DLH per unit 36,000 units 14,400 DLHs
17,600 DLHs

Additional information about the company follows:
a. Model X200 requires $33 in direct materials per unit, and model X99 requires $32.
b. The direct labor rate is $40 per hour.
c.

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

d.

Model X200 is more complex to manufacture than model X99 and requires the use of special equipment.

e.

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

Estimated Total Activity

Activity Cost Pool Activity Measure Estimated Total Cost X200 X99 Total
Machine setups Number of setups $ 187,200 96 144 240
Special processing Machine-hours 417,300 1,070 0 1,070
General factory Direct labor-hours 704,000 3,200 14,400 17,600
$ 1,308,500

Required:
1.

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

a.

Compute the predetermined overhead rate. (Round "pre-determined overhead rate" to nearest dollar.)

b.

Compute the unit product cost of each model. (Round "pre-determined overhead rate" to nearest dollar and round other intermediate calculations and final answers to 2 decimal places.)

2. Assume that the company decides to use activity-based 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 activity-based approach. (Round "Overhead cost per unit" answers to 2 decimal places.)

b.

Compute the unit product cost of each model. (Round intermediate calculations and final answers to 2 decimal places.)

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