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Sandstorm Manufacturing Inc. makes two types of industrial component parts-the LE100 and the UL600. It annually produces 65,000 units of LE100 and 13,000 units
Sandstorm Manufacturing Inc. makes two types of industrial component parts-the LE100 and the UL600. It annually produces 65,000 units of LE100 and 13,000 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 $371,325 $167,550 $538,875 Direct labor $125,000 $45,000 $170,000 es 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 Manufacturing- (and Activity Measure) Overhead LE100 UL600 Total 95,000 Machining (machine-hours) $ 248,000 65,000 160,000 Setups (setup hours) 202,500 100 350 450 Product-level (number of 88,400 1 1 2 products) General factory (direct labor 125,000 73,100 $ $45,000 $170,000 dollars) Total manufacturing overhead cost $ 612,000 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 DL$ 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 Activity Rate per MH per setup hr. Product-level per product General factory per DL$ 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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