Please only answer the two questions in part 2
Comprehensive Problem II - Worth 50 points Part ! 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 Number of Machine Setups 180 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 Expected Activity 1. Compute the activity rate for each activity pool. Activity Cost Pool Estimated Overhead Cost Machine Setups 21,600 Special Processing 180.000 180 Activity Rate 21.600/180- $120 180,000/4,000= $45 288,000/24.000= $12 4,000 General Factory 288,000 24,000 2. Overhead is assigned to the two products as follows: Rims: Activity Cost Pool Machine Setups Activity Rate Activity 120 100 Special Processing ABC Cost 120x100= 12,000 45x4,000= 180.000 12x8,000= 96,000 45 4.000 General Factory 12 8,000 Total Factory Overhead 288,000 Posts: Activity Cost Pool Machine Setups Activity Rate Activity 120 80 Special Processing ABC Cost 120x80= $9.600 45xO $0 1216,000= $192.000 45 ol General Factory INS 16,000 Total Factory Overhead 201.600 3. Determine the total and unit product cost of each product (Rims and Posts) according to the ABC system Rims Posts Direct materials: $17.00 $10.00 $16 per DLH X 0.40 DLHs per unita $16 per DLH x 0.20 DLHs per unit= Direct labor: $6.40 $3.20 Manufacturing Overhead: 288,000/20,000= 201.800/80.000= $14.40 $2.52 Unit cost $3780 $15.721 Part II 1. List and describe the steps in order for Implementing Activity Based and Costing 2. Identity and describe the limitations of Activity Based Costing