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Ellix Company manufactures two models of ultra-high fidelity speakersthe X200 model and the X99 model. Data regarding the two products follow: Product X200 X99 Direct
Ellix Company manufactures two models of ultra-high fidelity speakersthe X200 model and the X99 model. Data regarding the two products follow: Product X200 X99 Direct Labor-Hours 0.5 DLHS per unit 0.7 DLHs per unit Annual Production 23,000 units 43,000 units Total Direct Labor-Hours 11,500 DLHS 30,100 DLHS 41,600 DLHS Additional information about the company follows: a. Model X200 requires $33 in direct materials per unit, and model X99 requires $26. b. The direct labor workers are paid $30 per hour. c. The company has always used direct labor-hours as the allocation 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: Activity Cost Pool Machine setups Special processing General factory Activity Measure Number of setups Machine-hours Direct labor-hours Estimated Total Activity Estimated Total Cost X200 X99 Total $ 197,100 108 162 270 316,100 1,090 0 1,090 1,664,000 11,500 30,100 41,600 $ 2,177,200 Required: 1. Assume that the company continues to use direct labor-hours 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 approach. b. Compute the unit product cost of each model. Assume that the company decides to use activity-based absorption costing to apply overhead cost to products. 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.) Model X200 Model X99 Total overhead cost $1,265,560 $2,445,540 $ 56.87 Overhead cost per unit $ 55.02 Assume that the company decides to use activity-based absorption costing to apply overhead cost to products. Compute the unit product cost of each model. (Round your intermediate calculations and final answers to 2 decimal places.) $ 102.02 Unit product cost of Model X200 Unit product cost of Model X99 $ 96.87
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