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 laborhours. For the current year, the company has estimated that it will incur $4,370,150 in manufacturing overhead cost and produce 12,000 units ofthe deluxe model and 11?,000 units ofthe 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: Model Deluxe Regular Direct materials $ 145 $ 109 Direct labor $ 18 $ 6 Required: 'ia. Using direct laborhours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate. 'ib. Using the predetermined overhead rate computed in 1a above and other data from the problem, determine the unit product cost of each model. 2. Management is considering using activitybased absorption costing to apply manufacturing overhead cost to products. The activity based system would have the following four activity cost pools: Estimated Activity Cost Pool Activity Pleasure Overhead Cost Purchasing Purchase orders issued 5 242,550 Processing Machinehours 2,585,600 Scrapirework Scrap/rework orders issued 58?,600 Shipping Number of shipments 1,035,600 54,373,150 Expected Activity Activity Measure Deluxe Regular Total Purchase orders issued 4-90 980 1,4?0 Machine-hours 13,800 23,200 4?,000 Scrapfrework orders issued 4-00 320 ?20 Number of shipments 5,520 3,280 13,300 Determine the predetermined overhead rate for each of the four activity cost pools. 3. Using the predetermined overhead rates you computed in part [2], do the following: a. Compute the total amount of manufacturing overhead cost that would be applied to each model using the activitybased absorption costing system. Alter these totals have been computed, determine the amount of manufacturing overhead cost per unit of each model. b. Compute the unit product cost of each model {including direct materials, direct labor, and manufacturing overhead}. Complete this question by entering your answers in the lile below. Reg 13 Reg 2 Reg 3A Reg 33 Using direct labor-hours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate. {Round your answer to 2 decimal places.) 55 103.32 per DLH Req1B > Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Req 3A Req 3B :Using the predetermined overhead rate computed in 1-a above and other data from the problem, determine the unit product cost of each model. (Round your intermediate calculations and final answers to 2 decimal places.) Model Deluxe Regular Unit product cost 224.99 $ 30.99 Determine the predetermined overhead rate for each of the four activity oust peels. $ 165 per purchase order m $ "' Shipping Compute the total amount of manufacturing overhead cost that would be applied to each model using the activitybased absorption costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each model. (Round your intermediate calculations and "Overhead cost per unit'I answers to 2 decimal places.) Total overhead cost $ 1,810,850 $ 2,559,300 Overheadcostperunii $ 150.91 $ 21.3? Compute the unit product cost of each model (including direct materials, direct labor, and manufacturing overhead). {Round yuur intermediate calculations and nal answers to 2 decimal places.) Manufacturing overhead 150.91 21.37 Total unil product cost $ 313.91 $ 136.37
