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Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 67,000 units of EX300 and 13,200 units
Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 67,000 units of EX300 and 13,200 units of TX500. The company's 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 company's two product lines is shown below: Direct materials Direct labor EX300 $ 373,325 $127,000 TX500 $ 169,550 $46,000 Total $ 542,875 $173,000 The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Manufacturing Overhead Activity Setups (setup hours) Product-level (number of products) General factory (direct labor dollars) Total manufacturing overhead cost $ 195,600 225,600 156,620 79,580 5657,400 EX300 97,000 110 TX500 66,000 370 1 1 Total 163,000 480 2 $127,000 $ 46,000 $173,000 Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. 2-a. Compute the activity rate for each activity cost pool. 2-b. Using the activity rates, compute the unit product cost for each product. Complete this question by entering your answers in the tabs below. 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. 2-a. Compute the activity rate for each activity cost pool. 2-b. Using the activity rates, compute the unit product cost for each product. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Compute the activity rate for each activity cost pool. (Round your Machining and General factory activity rates to 2 decimal places.) Activity Cost Pools Machining Setups Product-level General factory Activity Rate per MHR per setup hour per product per DLS Total manufacturing overnead cost Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. 2-a. Compute the activity rate for each activity cost pool. 2-b. Using the activity rates, compute the unit product cost for each product. Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 2A Req 28 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
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