Problem 4-12 Contrasting ABC and Conventional Product Cost [LO4-2, LO4-3, L04-4) Precision Manufacturing Inc. (PMI) makes two types of industrial component parts--the EX300 and the TX500 It annually produces 51000 units of EX300 and 11600 units of TX500. The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct tabor dollars as the allocation base. Additional information relating to the company's two product lines is shown below. EX TO Total Direct materiais 3357,325 $193,550 $510,075 Direct labor 1111,000 $30,000 $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 Cost Pool Cand Activity Measure) Machining (machine-hours) Setups (setup hours) Product level (number of products) General factory direct labor dollars) Total manufacturing overhead cost Manufacturing Overhead EX $152,900 81, 74,400 so 38,660 1 38,240 $111.000 5342,700 Tsoo 58,000 210 1 138,000 Total 139,000 240 2 $149,000 Required: 1. Compute the plantwide overhead rate that would be used in the company's conventional cost system 16. 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 our answers in the tabs below Problem 4-12 Contrasting ABC and Conventional Product Cost [LO4-2, LO4-3, L04-4) Precision Manufacturing Inc. (PMI) makes two types of industrial component parts--the EX300 and the TX500 It annually produces 51000 units of EX300 and 11600 units of TX500. The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct tabor dollars as the allocation base. Additional information relating to the company's two product lines is shown below. EX TO Total Direct materiais 3357,325 $193,550 $510,075 Direct labor 1111,000 $30,000 $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 Cost Pool Cand Activity Measure) Machining (machine-hours) Setups (setup hours) Product level (number of products) General factory direct labor dollars) Total manufacturing overhead cost Manufacturing Overhead EX $152,900 81, 74,400 so 38,660 1 38,240 $111.000 5342,700 Tsoo 58,000 210 1 138,000 Total 139,000 240 2 $149,000 Required: 1. Compute the plantwide overhead rate that would be used in the company's conventional cost system 16. 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 our answers in the tabs below
