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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
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 59.000 units of EX300 and 12,400 units of TX500. The company's conventional cost system allocates manufacturing overhend 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 EX300 SX500 Total Direct materials $365,325 $161,550 $526,875 Direct Labor $119.000 $ 42,000 $161,000 The company is considering Implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below. Activity Activity Coat 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 $203,850 140,400 96, 890 57960 5499, 100 UX300 89,000 70 1 $119,000 TX500 62,000 290 2 542,000 Total 151,000 360 2 $161,000 Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system 1-6. Using the plantwide rate, compute the unit product cost for each product. 2-a. Compute the activity rate for each activity cost pool 2-6. Using the activity rates, compute the unit product cost for each product
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