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Problem 4-12 (Algo) Contrasting ABC and Conventional Product Cost [LO4-2, LO4-3, LO4-4] Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300
Problem 4-12 (Algo) Contrasting ABC and Conventional Product Cost [LO4-2, LO4-3, LO4-4] Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 50,000 units of EX300 and 11,500 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 $ 356,325 $110,000 TX500 $ 152,550 $ 37,500 Total $ 508,875 $147,500 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) Setups (setup hours) General factory (direct labor dollars) Product-level (number of products) Total manufacturing overhead cost Manufacturing Overhead $144,375 67,500 EX300 80,000 Activity TX500 57,500 Total 137,500 25 200 75,750 1 1 225 2 36,875 $110,000 $ 37,500 $ 147,500 $ 324,500 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. Setups (setup hours) Product-level (number of products) General factory (direct labor dollars) 67,500 75,750 36,875 25 200 225 1 1 2 $110,000 $ 37,500 $ 147,500 Total manufacturing overhead cost $ 324,500 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 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 DLS Req1A Req 18 >
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