Required information [The following information applies to the questions displayed below.) Puget World, Inc., 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 Total Direct Labor- Hours 20,000 15,000 Annual Production 5,000 units 10,000 units Model N 800 XL Model N 500 4.0 1.5 35,000 a. Additional information about the company follows: Model N 800 XL requires $65 in direct materials per unit, and Model N 500 requires $20. b. The direct labor wage rate is $20 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: a. Additional information about the company follows: Model N 800 XL requires $65 in direct materials per unit, and Model N 500 requires $20. b. The direct labor wage rate is $20 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 Activity Cost Pool Measure Number of Machine setups setups Special processing Machine-hours General factory Direct labor- hours Estimated Overhead Cost $ 430,000 200,000 1,645,000 $2,275,000 Expected Activity Activity Measure Model N 800 Model N Total XL 500 Number of 140 260 400 setups Machine-hours 16,000 0 16.000 Activity Activity Cost Pool Measure Number of Machine setups setups Special processing Machine-hours General factory Direct labor- hours Estimated Overhead Cost $ 430,000 200,000 1,645,000 $2,275,000 Expected Activity Model N 800 Model N Activity Measure Total XL 500 Number of 140 260 400 setups Machine-hours 16,000 o 16,000 Direct labor- hours 20,000 15,000 35,000 2. Assume that the company decides to use activity-based costing to assign manufacturing overhead cost to products. a(1) Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) 2. Assume that the company decides to use activity-based costing to assign manufacturing overhead cost to products. a(1) Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Machine setup Special processing General factory per setup per MH per DLH a(2) Determine the amount of overhead cost that would be assigned to each model using the activity-based costing system. (Round your answers to 2 decimal places.) Model N 800 XL Model N 500 Overhead cost per unit b. Compute the unit product cost of each model. (Round your answers to 2 decimal places.) Model N 800 XL Model N 500 Unit product cost
