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Ellix Company manufactures two models of ultra-high fidelity speakers-the 200 model and the 99 model. Data regarding the two products follow: Additional information about the
Ellix Company manufactures two models of ultra-high fidelity speakers-the 200 model and the 99 model. Data regarding the two products follow: Additional information about the company follows: a. Model 200 requires $40 in direct materials per unit, and model 99 requires $24. b. The direct labor workers are paid $20 per hour. c. The company has always used direct labor-hours as the allocation base for opplying manufacturing overhead cost to products. d. Model 200 is more complex to manufacture than model 99 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 identifled as follown: Required: 1. Assume that the company continues to use direct labochours 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. 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 opproach. b. Compute the unit product cost of each model
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