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:

	Direct Labor- Hours per Unit	Annual Production		Total Direct Labor-Hours
Model N 800 XL	2.5	6,000	units	15,000
Model N 500	1.2	12,500	units	15,000
				30,000

Additional information about the company follows:

a. Model N 800 XL requires $75 in direct materials per unit, and Model N 500 requires $30.

b. The direct labor wage rate is $22 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:

Activity Cost Pool	Activity Measure	Estimated Overhead Cost
Machine setups	Number of setups	$ 450,000
Special processing	Machine-hours	210,000
General factory	Direct labor-hours	1,590,000
		$ 2,250,000

Activity Measure	Expected Activity
	Model N 800 XL	Model N 500	Total
Number of setups	210	290	500
Machine-hours	17,500	0	17,500
Direct labor-hours	15,000	15,000	30,000

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.

Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products. Compute the unit product cost of each model. (Round your answers to 2 decimal places.)

Model N 800 XL	$516.50selected answer incorrect
Model N 500	$140.88selected answer incorrect