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Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor-intensive than that

Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor-intensive than that of Model B. Model B is also the more popular of the two speakers. The following data has been gathered for the two products:
Product Data
Model A Model B
Units produced per year 10,000 100,000
Prime costs $147,000 $1,470,000
Direct labor hours 136,000 290,000
Machine hours 18,000 198,000
Production runs 30 70
Inspection hours 800 1,300
Maintenance hours 9,000 91,000
Overhead costs:
Setup costs $250,000
Inspection costs 231,000
Machining 314,000
Maintenance 270,000
Total $1,065,000
Required:
1. Compute the overhead cost per unit for each product by using a plantwide rate based on direct labor hours. (Round to two decimal places.)
2. Compute the overhead cost per unit for each product by using ABC. (Round rates and unit overhead cost to two decimal places.)
3. Suppose that Ramsey decides to use departmental overhead rates. There are two departments: Department 1 (machine intensive) with a rate of $3.10 per machine hour and Department 2 (labor intensive) with a rate of $1.00 per direct labor hour. The consumption of these two drivers is as follows:
Department 1
Department 2
Machine Hours
Direct Labor Hours
Model A 11,000 128,000
Model B 170,000 260,000
Compute the overhead cost per unit for each product by using departmental rates. (Round to two decimal places.)
4. CONCEPTUAL CONNECTION Using the activity-based product costs as the standard, comment on the ability of departmental rates to improve the accuracy of product costing. Did the departmental rates do better than the plantwide rate?

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