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Problem 4-17 (Algo) Contrast Activity-Based Costing and Conventional Product Costing [LO4-2, L04-3. LO4-4] [The following information applies to the questions displayed below.] Puget World, Incorporated,
Problem 4-17 (Algo) Contrast Activity-Based Costing and Conventional Product Costing [LO4-2, L04-3. LO4-4] [The following information applies to the questions displayed below.] Puget World, Incorporated, manufactures two models of television sets, the N 800 XL model and the N 500 model. Data regarding the two products follow C Model N B00 XL Model N Sea Activity Cost Pool Machine setups Special processing General factory Activity Measure Number of setups Machine-hours Direct labor-hours Problem 4-17 (Algo) Part 1 Direct Labor- Hours per Unit Additional information about the company follows a. Model N 800 XL requires $60 in direct materials per unit, and Model N 500 requires $15. b. The direct labor wage rate is $19 per hour. c. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products. d. Model N 800 XL is more complex to manufacture than Model N 500 and requires the use of special equipment. Consequently, the company is considering the use of activity-based costing to assign manufacturing overhead cost to products. Three activity cost pools have been identified as follows: Req 14 3.5 1,2 Reg 18 Predetermined overhead rate Annual Production 4,500 units 12,500 units Activity Measure Number of setups Machine-hours Direct labor-hours Model N 809 XL 120 15,000 15,750 Total Direct Labor Hours 15,750 15,000 30,750 Complete this question by entering your answers in the tabs below. e per DLH Estimated Overhead Cost $ 420,000 195,000 1,230,000 $1,845,000 Required: 1. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products. a. Compute the predetermined overhead rate. b. Compute the unit product cost of each model. Expected Activity Model N 500 320 0 15,000 Total 420 Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products. Compute the predetermined overhead rate. (Round your answer to 2 decimal places.) 9944153 15,000 30,750
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