Sandstorm Manufacturing Inc. makes two types of industrial component partsthe LE100 and the UL600. It annually produces 120,000 units of LE100 and 25,000 units of UL600. The companys 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 companys two product lines is shown below: (30 points)

LE100 UL600 Total Direct materials $720,000 $357,000 $1,077,000 Direct labor $240,000 $100,000 $340,000

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 LE100 UL600 Total Machining (machine-hours) $ 400,000 36,000 135,000 171,000 Setups (setup hours) 300,000 150 600 750 Product-level (number of products) 200,500 2 2 4 General factory (direct labor dollars) 120,000 $240,000 $85,000 $325,000 Total manufacturing overhead cost $1,020,500 Required: a. Compute the activity rate for each activity cost pool. b. Using the activity rates, compute the overhead allocated to each product unit. c. Compute product cost for each product.