Marine, Incorporated, manufactures a product that is available in both a flexible and a rigid model. The company has made the rigid model for years: the flexible model was introduced several years ago to tap a new segment of the market. Since introduction of the flexible model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the flexible model have been increasing rapidly Overhead is applied to products on the basis of direct labor hours. At the beginning of the current year, management estimated that $990,000 in overhead costs would be incurred and the company would produce and sell 2.000 units of the flexible model and 10,000 units of the regular model. The flexible model requires 20 hours of direct labor time per unit, and the regular model requires 1.40 hours. Direct materials and labor costs per unit are given below: Flexible Rigid Direct materials cont per unit $ 75 Direct labor cost per unit $ 25 $ 10 Required: 1-a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to product 1-b. Compute the unit product cost for one unit of each model. 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that your activity cost pools be used. These cost pools and their associated activities are listed as Tollows: $ 130 Activity Coat Pool and Activity Measure Purchase orders (number of orders) Bevork requests number of requesta) Product testing number of tests) Machine related machine-hours) Estimated Expected Nativity overhead Cost Flexible Rigid TOAT $ 24,000 140 260 400 14,000 00 120 200 230,000 1,100 900 2,000 722,000 1,300 7,725 9.025 $ 990,000 Compute the activity rate for each of the activity cost pools 3-3. Using activity based costing, determine the total amount of overhead that would be assigned to each model for the year 3.6. Using activity-based costing compute the unit product cost for one unit of each model Activity Cost Pool and activity Measure Purchase orders number of orders) Rework requests number of requests) Product testing number of tests) Machine related machine-hours) Estimated Expected Activity Overhead Cost Flexible Rigid Total $ 24,000 140 260 400 14,000 120 200 230,000 1,100 900 2,000 722,000 1,300 7,725 9,025 $ 990,000 80 Compute the activity rate for each of the activity cost pools. 3-a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year. 3-b. Using activity-based costing, compute the unit product cost for one unit of each model. Complete this question by entering your answers in the tabs below. Reg 1A Req 1B Reg 2 Reg 3A Req 3B Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. Predetermined overhead rate per DLH RA Req 18> Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2 Req 3A Req 3B Compute the unit product cost for one unit of each model. Unit Product Cost Flexible Rigid 2. An intern suggested that the company use activity-based costing to cost its products. At came back with the recommendation that four activity cost pools be used. These cost pools follows: Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Estimated Expected Activity Overhead Cost Flexible Rigid Tot $ 24,000 140 260 14,000 80 120 2 230,000 1,100 900 2,00 722,000 1,300 7,725 9,02 $ 990,000 Compute the activity rate for each of the activity cost pools. 3-a. Using activity-based costing, determine the total amount of overhead that would be assign 3-b. Using activity-based costing, compute the unit product cost for one unit of each model. Complete this question by entering your answers in the tabs below. Reg 1A Req 1B Reg 2 Req Req 3B Using activity-based costing, determine the total amount of overhead that would be assigned to each Total Amount of Overhead Flexible Rigid Compute the activity rate for each of the activity cost pools. 3-a. Using activity-based costing, determine the total amount of overhead that would be assign 3-b. Using activity-based costing, compute the unit product cost for one unit of each model. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 2 Req Req 3B Using activity-based costing, compute the unit product cost for one unit of each model. (Do not round calculations and round your answers to 2 decimal places.) Unit Product Cost Flexible Rigid
