Siegel Company manufactures a product that is available in both a deluxe model and a regular...

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Siegel Company manufactures a product that is available in both a deluxe model and a regular model. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company's profits have steadily declined and management has become increasingly concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Manufacturing overhead is assigned to products on the basis of direct labor-hours. For the current year, the company has estimated that it will incur $4,632,250 in manufacturing overhead cost and produce 25,000 units of the deluxe model and 125,000 units of the regular model. The deluxe model requires 0.6 hours of direct labor time per unit, and the regular model requires 0.3 hour. Material and labor costs per unit are as follows: Direct materials Direct labor Required: Deluxe $ 153 $ 12 Model Regular $ 112 $ 11 1-a. Using direct labor-hours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate. 1-b. Using the predetermined overhead rate computed in 1-a above and other data from the problem, determine the unit product cost of each model. 2. Management is considering using activity-based absorption costing to apply manufacturing overhead cost to products. The activity- based system would have the following four activity cost pools: Activity Cost Pool Purchasing Processing Scrap/rework Shipping Activity Measure Purchase orders issued Machine-hours Scrap/rework orders issued Number of shipments Estimated Overhead Cost $ 210,600 2,425,000 714,150 1,282,500 $ 4,632,250 Siegel Company manufactures a product that is available in both a deluxe model and a regular model. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company's profits have steadily declined and management has become increasingly concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Manufacturing overhead is assigned to products on the basis of direct labor-hours. For the current year, the company has estimated that it will incur $4,632,250 in manufacturing overhead cost and produce 25,000 units of the deluxe model and 125,000 units of the regular model. The deluxe model requires 0.6 hours of direct labor time per unit, and the regular model requires 0.3 hour. Material and labor costs per unit are as follows: Direct materials Direct labor Required: Deluxe $ 153 $ 12 Model Regular $ 112 $ 11 1-a. Using direct labor-hours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate. 1-b. Using the predetermined overhead rate computed in 1-a above and other data from the problem, determine the unit product cost of each model. 2. Management is considering using activity-based absorption costing to apply manufacturing overhead cost to products. The activity- based system would have the following four activity cost pools: Activity Cost Pool Purchasing Processing Scrap/rework Shipping Activity Measure Purchase orders issued Machine-hours Scrap/rework orders issued Number of shipments Estimated Overhead Cost $ 210,600 2,425,000 714,150 1,282,500 $ 4,632,250