Question
Precision Manufacturing Inc. (PMI) makes two types of industrial component partsthe EX300 and the TX500. It annually produces 51,000 units of EX300 and 11,600 units
Precision Manufacturing Inc. (PMI) makes two types of industrial component partsthe EX300 and the TX500. It annually produces 51,000 units of EX300 and 11,600 units of TX500. The companys conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the companys two product lines is shown below:
EX300 | TX500 | Total | |||||||
Direct materials | $ | 357,325 | $ | 153,550 | $ | 510,875 | |||
Direct labor | $ | 111,000 | $ | 38,000 | $ | 149,000 | |||
The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below:
Activity | ||||||||||||
Activity Cost Pool (and Activity Measure) | Manufacturing Overhead | EX300 | TX500 | Total | ||||||||
Machining (machine-hours) | $ | 152,900 | 81,000 | 58,000 | 139,000 | |||||||
Setups (setup hours) | 74,400 | 30 | 210 | 240 | ||||||||
Product-level (number of products) | 76,660 | 1 | 1 | 2 | ||||||||
General factory (direct labor dollars) | 38,740 | $ | 111,000 | $ | 38,000 | $ | 149,000 | |||||
Total manufacturing overhead cost | $ | 342,700 | ||||||||||
Required:
Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Compute the plantwide overhead rate that would be used in the company's conventional cost system. (Round your answer to 2 decimal places.) Predetermined overhead rate per DL$ Req 1B Req 1A Req 2A Req 2B Using the plantwide rate, compute the unit product cost for each product. (Round your intermediate calculations and final answers to 2 decimal places.) EX300 TX500 Unit product cost Req 2B Req 1A Req 1B Req 2A Compute the activity rate for each activity cost pool. (Round your Machining and General factory activity rates to 2 decimal places.) Activity Rate Activity Cost Pools per MHR per setup hr. per product Machining Setups Product-level General factory per DLS Req 1A Req 2B Req 1B Req 2A Using the activity rates, compute the unit product cost for each product. (Round your intermediate calculations and final answers to 2 decimal places.) EX300 TX500 Unit product cost
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started