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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
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 4.0 Model N 800 XL Model N 500 Annual Production 5,000 units 10,000 units Total Direct Labor- Hours 20,000 15,000 1.5 35,000 Additional information about the company follows: a. 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 Machine setups Number of setups Special processing Machine-hours Direct labor- General factory hours Estimated Overhead Cost $ 430,000 200,000 1,645,000 $2,275,000 Total Expected Activity Model N 800 Model N Activity Measure XL 500 Number of 140 260 setups 400 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 Required: 1. 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.) a. Predetermined overhead rate per DLH b. Compute the unit product cost of each model. (Round your answers to 2 decimal places.) Compute the unit product cost of each model. (Round your answers to 2 decimal b. places.) Model N 800 XL Model N 500
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