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 $5,725,200 In manufacturing overhead cost and produce 13,000 units of the deluxe model and 123,000 unlits of the regular model. The deluxe miodel requires 1.0 hours of direct labor time per unit, and the regular model requires.5 hours. Materlal and labor costs per unit are as follows: Model Deluxe Regular $106 $158 $11 Direct materials Direct labor $6 Requirement 1: (a) Using direct labor-hours as the base for assigning manufacturing overhead cost to products, compute the predetermined overhead rate. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) Predetermined overhead rate $ per DLH (b) Using the above rate and other data from the problem, determine the unit product cost of each model. (Round your answers to 2 decimal places. Omit the "S" sign in your response.) Deluxe Regular Unit product cost Requirement 2: Management is considering using activity-based costing to apply manufacturing overhead costs to products for external financial reports. The activity-based costing system would have the following four activity cost pools: Estimated Overhead Cost $288,000 3,022,500 632,700 1,782,000 $5.725,200 Activity Cost Pool Purchasing Processing Scrap/rework Shipping Activity Measure Purchase orders issued Machine-hours Scrap/rework orders issued Number of shipments Expected Activity Regular 960 27,900 380 9.720 Activity Measure Purchase orders issued Machine-hours Scrap/rework orders issued Number of shipments Total 1,440 46,500 855 16.200 Deluxe 480 18,600 475 6,480 Determine the predetermined overhead rates for each of the four activity cost pools. (Omit the "$" sign in your response.) Activity Cost Pool Purchasing Predetermined Overhead Rate per purchase order Processing per machine-hour Scrap/rework Shipping per order per shipment . Requirement 3: Using the predetermined overhead rates you computed in requirement 2 above, do the following: (a) Compute the total amount of manufacturing overhead cost that would be applied to each model using the activity-based costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit for each model. (Round overhead cost per unit to 2 decimal places. Omit the "$" sign in your response.) The Deluxe Model: Overhead Applied Activity Cost Pool Purchasing Processing Scrap/rework Shipping Total overhead cost Overhead cost per unit The Regular Model: Overhead Applied Activity Cost Pool Purchasing Processing Scrap/rework Shipping Total overhead cost Overhead cost per unit (b) Compute the unit product cost of each model (direct materials, direct labor, and manufacturing averhead). (Round your answers to 2 decimal places. Omit the "S" sign in your response.) Deluxe Regular Direct materials Direct labor Manufacturing overhead Total unit product cost
