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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 $3\mathrm{.}04,000$ units $12,000$

Model N $5001\mathrm{.}012,000$ units $12,000$

$24,000$

Additional information about the company follows:

a$.$ Model N $800$ XL requires $$85$ in direct materials per unit, and Model N $500$ requires $$35.$

b$.$ The direct labor wage rate is $$17$ 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 $ $435,000$

Special processing Machine$-$hours $171,000$

General factory Direct labor$-$hours $1,554,000$

$ $2,160,000$

Activity Measure Expected Activity

Model N $800$ XL Model N $500$ Total

Number of setups $90200290$

Machine$-$hours $18,000018,000$

Direct labor$-$hours $12,00012,00024,000$

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.