Exercise 3-8 Computing ABC Product Costs [LO3-2, LO3-3]

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Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:

	Direct Labor-Hours per unit	Annual Production
Rims	0.60	22,000 units
Posts	0.20	80,000 units

Additional information about the company follows:

a. Rims require $14 in direct materials per unit, and Posts require $10.

b. The direct labor wage rate is $15 per hour.

c. Rims are more complex to manufacture than Posts and they require special equipment.

d. The ABC system has the following activity cost pools:

		Estimated Activity
Activity Cost Pool	Activity Measure	Estimated Overhead Cost		Rims	Posts	Total
Machine setups	Number of setups	$	27,200	120	280	400
Special processing	Machine-hours	$	130,400	5,000	0	5,000
General factory	Direct labor-hours	$	1,056,000	5,000	61,000	66,000

Exercise 3-8 Part 1

Required:

1.

Compute the activity rate for each activity cost pool. (Round your final answers to 2 decimal places.)

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Activity Cost Pool	Activity Rate
Machine setups		per setup
Special processing		per MH
General factory		per DLH

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Exercise 3-8 Part 2

2.

Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)

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Unit product cost of Rims
Unit product cost of Posts

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