Murphy Corporation manufactures two models of ultra-high fidelity speakers, the X200 model and the X99 model. Data regarding the two products follow:

	Direct Labor- Hours per Unit	Annual Production	Total Direct Labor-Hours
Model X200	2.5	1,000 units	2,500
Model X99	1.2	10,000 units	12,000
			14,500

Additional information about the company follows:

a.	Model X200 requires $100 in direct materials per unit, and Model X99 requires $60.
b.	The direct labor wage rate is $20 per hour.
c.	The company has always used direct labor-hours as the 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. Consequently, the company is considering the use of activity-based costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows:

Activity Cost Pool	Activity Measure		Estimated Overhead Cost
Machine setups	Number of setups		$	50,000
Special processing	Machine-hours			95,000
General factory	Direct labor-hours			290,000
			$	435,000

	Expected Activity
Activity Measure	Model X200	Model X99	Total
Number of setups	100	400	500
Machine-hours	47,500	0	47,500
Direct labor-hours	2,500	12,000	14,500

6.

Required:

1.	Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products.

a.	Compute the predetermined overhead rate.

b.	Compute the unit product cost of each model.

2.

Assume that the company decides to use activity-based costing to apply manufacturing overhead cost to products.

a-1.	Compute the activity rate for each activity cost pool.

a-2.	Determine the amount of overhead cost that would be applied to each model using the activity-based costing system.

b.

Compute the unit product cost of each model.

7.)

2.

Assume that the company decides to use activity-based costing to apply manufacturing overhead cost to products.

a-1.	Compute the activity rate for each activity cost pool.

a-2.	Determine the amount of overhead cost that would be applied to each model using the activity-based costing system.

b.	Compute the unit product cost of each model.