Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 3-12A Contrasting ABC and Conventional Product Costs [LO3-2, LO3-3, LO3-4] Precision Manufacturing Inc. (PMI) makes two types of industrial component partsthe EX300 and the
Problem 3-12A Contrasting ABC and Conventional Product Costs [LO3-2, LO3-3, LO3-4] Precision Manufacturing Inc. (PMI) makes two types of industrial component partsthe EX300 and the TX500. It annually produces 63,000 units of EX300 and 12,800 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:
Problem 3-12A Contrasting ABC and Conventional Product Costs [LO3-2, LO3-3, LO3-4] Precision Manufacturing Inc. (PMI) makes two types of industrial component parts the EX300 and the Tx500. It annually produces 63,000 units of EX300 and 12,800 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. TX500 Total EX300 $369,325 $165,550 $534,875 Direct materials $123,000 44,000 $167,000 Direct labor 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 Manufacturing EX300 (and Activity Measure) Overhead TX500 Total Machining (machine-hours) 227,650 93,000 64,000 157,000 180,600 Setups (Setup hours) 330 420 91,080 Product-level (number of products) $167,000 General factory (direct labor dollars) 68,470 $123,000 44,000 Total manufacturing overhead cost 567,800 Required: 1-a. Compute the plantwide overhead rate that would be used in the Company's conventional cost system. (Round your answer to 2 decimal places.) Predetermined overhead per DL$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