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Sandstorm Manufacturing Inc. makes two types of industrial component partsthe LE100 and the UL600. It annually produces 50,000 units of LE100 and 11,500 units of
Sandstorm Manufacturing Inc. makes two types of industrial component partsthe LE100 and the UL600. It annually produces 50,000 units of LE100 and 11,500 units of UL600.The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: LE100 UL600 Total Direct materials Direct labor $356,325 $152,550 $508,875 $ 110,000 $ 37,500 $ 147,500 The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Activity Activity Cost Pool (and Activity Measure) Manufacturing Overhead UL600 LE100 80,000 57,500 Machining (machine-hours) Setups (setup hours) Product-level (number of products) General factory (direct labor dollars) $ 144,375 67,500 75,750 Total 137,500 225 2. 200 25 1 1 110,000 36,875 $ $37,500 $147,500 Total manufacturing overhead cost $ 324,500 Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. (Round your final answer to 2 decimal places.) Predetermined overhead rate per DLS 1-b. Using the plantwide rate, compute the unit product cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) LE100 UL600 Unit product cost 2-a. Compute the activity rate for each activity cost pool. (Round your Machining and General factory activity rates to 2 decimal places.) Activity Cost Pools Machining Setups Product-level General factory Activity Rate per MH per setup hr. per product per DLS 2-b. Using the activity rates, compute the unit product cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) LE100 UL600 Unit product cost
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