Problem 4-15 Contrasting ABC and Conventional Product Costs [LO4-2, LO4-3, LO4-4) Marine, Inc., manufactures a product that is available in both a flexible and a rigid model. The company has made the rigid model for years, the flexible model was introduced several years ago to tap a new segment of the market. Since introduction of the flexible model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the flexible model have been increasing rapidly. Overhead is applied to products on the basis of direct labor-hours. At the beginning of the current year, management estimated that $714,000 in overhead costs would be incurred and the company would produce and sell 2,000 units of the flexible model and 10,000 units of the regular model. The flexible model requires 3.0 hours of direct labor time per unit, and the regular model requires 1.50 hours. Direct materials and labor costs per unit are given below: Flexible Rigid Direct materials cont per unit $ 30 $15 $125 Direct labor cost per unit Required: 1-a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. 1-b. Compute the unit product cost for one unit of each model. 2. An intem suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows: Expected Activity Estimated Activity Coat Pool and Activity Measure Overhead Coat Plexible Rigid Total Purchase orders number of orders) $ 22,500 350 450 Rework requests number of requests) 12,500 75 175 250 Product testing number of teata) 170,000 650 710 1,360 Machine related machine-hours) 509,000 1. 100 3,990 5,090 0714,000 100 Compute the activity rate for each of the activity cost pools. 3-a. Using activity based costing, determine the total amount of overhead that would be assigned to each model for the year 3.b. Using activity based costing, compute the unit product cost for one unit of each model Required: 1-a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. 1-b. Compute the unit product cost for one unit of each model. 2 An inter suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows: Expected Activity Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related machine-hours) Estimated Overhead Coat $ 22,500 12,500 170,000 509,000 $714,000 Flexible 100 75 650 1,100 Rigid 350 175 710 3,990 Total 150 250 1,360 5,090 Compute the activity rate for each of the activity cost 3-a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year, 3-b. Using activity-based costing, compute the unit product cost for one unit of each model Complete this question by entering your answers in the tabs below. Req 1A Reg 18 Reg 2 Red Reg38 Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. Predetermined overhead rate per DLH RAMA Req 18 > Compute the activity rate for each of the activity cost pools. 3.a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year, 3-b. Using activity-based costing, compute the unit product cost for one unit of each model. es Complete this question by entering your answers in the tabs below. Req 1A Reg 18 Reg 2 Req 3A Reg 38 Compute the unit product cost for one unit of each model. Unit Product Cost Flexible Rigid Required: 1-a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. 1-5. Compute the unit product cost for one unit of each model. 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. In came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed a follows: Expected Activity Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Estimated Overhead Coat $ 22,500 12,500 170,000 509,000 $714,000 Flexible 100 75 650 1,100 Rigid 350 175 710 3,990 Total 450 250 1, 360 5,090 Compute the activity rate for each of the activity cost pools. 3-a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year. 3-6. Using activity-based costing, compute the unit product cost for one unit of each model Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Req Reg 38 Compute the activity rate for each of the activity cost pools. Activity Cost Pool Purchase orders Rework requests Product testing Machine-related Activity Rate per order per request per test per MH Required: 1-a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. 1-b. Compute the unit product cost for one unit of each model 2. An intern suggested that the company use activity based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows: Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requesta) Product testing (number of testa) Machine related (machine-hours) Expected Activity Estimated Overhead Coat Flexible Rigid Total $ 22,500 100 350 450 12,500 75 175 250 170,000 650 710 1,360 509,000 1,100 3,990 5,090 $714,000 Compute the activity rate for each of the activity cost pools. 3-a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year. 3-b. Using activity-based costing, compute the unit product cost for one unit of each model. Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Reg 2 Reg 3A Reg 38 Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year. Total Amount of Overhead Flexible Rigid Expected Activity Rigid 350 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related machine-hours) Estimated Overhead Coat $ 22,500 12,500 170,000 509,000 $714,000 Flexible 100 75 650 1,100 175 Total 450 250 1,360 5,090 710 3,990 Compute the activity rate for each of the activity cost pools 3-a. Using activity-based costing, determine the total amount of overhead that would be assigned to each model for the year. 3-6. Using activity-based costing, compute the unit product cost for one unit of each model. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 Reg 3A Reg 3B Using activity based costing, compute the unit product cost for one unit of each model. (Do not round intermediate calculations and round your answers to 2 decimal places.) Unit Product Cost Flexible Rigid