part 2:

1. List and describe the steps (in order) for implementing activity based and costing.

2. Identify and describe the limitations of activity-based costing

De o u Design Layout References Gothic - 11 -A- A A U abe X2 X? A. a comprehensive Problem II - ABU- - Company muy Mailings Review View Acrobat A E. E . 3 3 2 + 1 AaBbCcDdEe AaBb CcDdEe No Spacing AaBbCcDc AoBbc Heading 1 Head Normal Comprehensive Problem II - Worth 50 points Part 1 Performance Products Corporation makes two products, Titanium Rims and Posts. Data regarding the two products is provided in the following table: Direct Labor Hours per Unit Annual Production Rims 0.40 20,000 units Posts 0.20 80,000 units Additional information about the company follows: a. Rims require $17.00 in direct materials per unit, and Posts require $10.00. b. The direct labor wage rate is $16.00 per hour. c. Rims are more complex to manufacture than Posts, and they require special equipment. d. The Activity Based Costing (ABC) System has the following activity cost pools: Activity Cost Pool Activity Measure Rims Posts Estimated Overhead Cost Total Activity for Rims and Posts Machine Setups $21,600 100 80 180 Number of Machine Setups Special Processing Machine Hours $180,000 4,000 4,000 General Factory Direct Labor Hours $288,000 8,000 16,000 24,000 Required. Use the tables on the following page to determine the following required components: In order to receive full credit please show all work!! 1. Compute the activity rate for each activity pool. 2. Determine the amount of manufacturing overhead assigned to each product (Rims and Posts) for each activity cost pool. 3. Determine the unit product cost of each product (Rims and Posts) according to the ABC system. 1. Compute the activity rate for each activity pool. Activity Cost Pool Estimated Overhead Cost Expected Activity Activity Rate Machine Setups Special Processing General Factory 2. Overhead is assigned to the two products as follows: Rims: Activity Cost Pool Activity Rate Activity ABC Cost Machine Setups Special Processing General Factory Total Factory Overhead Posts: Activity Cost Pool Activity Rate Activity ABC Cost Machine Setups Special Processing General Factory Total Factory Overhead 3. Determine the total and unit product cost of each product (Rims and Posts) according to the ABC system. Rims Posts Direct materials: Direct labor: Manufacturing Overhead: Unit cost