1. Landscape Corporation makes two garden products: Winter and Summer

Direct Labor-Hours Annual

Per Unit Production

Winter 3.2 50,000 units Summer 4.5 30,000 units

Additional information about the company follows:

1. Winter requires $31 in direct materials per unit, and Summer requires $54.
2. The direct labor wage rate is $26/hour.
3. Summer units are more complex to manufacture than the standard units and they require special equipment.
4. The ABC system has the following cost pools:

Estimated Activity

Estimated

Activity Cost Pool Activity Measure Overhead Cost Winter Summer Total

Machine setups Number of setups $210,000 150 60 210

Special processing Machine-hours $300,000 500 700 1,200

General factory Direct labor-hours $420,000 4,000 2,000 6,000

Required:

1. (3 points) Compute the activity rate for each cost pool
2. (5 points) Determine the unit product cost of each product according to the ABC

system.