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Problem (2) dex VIEW PROBLEM: ACTIVITY-BASED COSTING peluxe deck chair: 2000 units x 5 DLHS per unit. 10,000 Tourist deck chair: 10,000 units x 4
Problem (2) dex VIEW PROBLEM: ACTIVITY-BASED COSTING peluxe deck chair: 2000 units x 5 DLHS per unit. 10,000 Tourist deck chair: 10,000 units x 4 DLHS per units..... 40,000 Total Direct Labor Hours 50,000 Direct Materials Deluxe $ 25 Tourist $ 17 Direct Labor ($12 per DLH) $ 60 $ 48 Activities and Activity Measures Estimated Overhead Expected Activity Tourist Deluxe TOTAL Labor related (direct labor hours) $ 80,000 10,000 40,000 50,000 Machine setups (number of setups) 150,000 3,000 2,000 5,000 Parts administration (number of parts) 160,000 50 30 80 production orders (number of orders) 70,000 100 300 400 Material receipts (number of receipts) 90,000 150 600 750 General factory (machine-hours) 250,000 12,000 28,000 40,000 Total Estimated Overhead $ 800,000 a) b) Compute a predetermined overhead rate based on the information provided. Assume the company applies overhead on the basis of direct labor hours. Compute the total product cost for both the deluse and tourist models using the predetermined overhead rate you calculated in part (a). Assume the company uses activity-based costing (ABC). Compute the activity rate (overhead rate) for each of the activities identified above. Using the overhead activity rates computed in (cl, determine overhead applied to each product d) using ABC. e) Based on the overhead rate computed in (d), determine the product cost for each product using ABC
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