Siegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly.

Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that $2,042,100 in overhead costs would be incurred and the company would produce and sell 10,000 units of the deluxe model and 25,026 units of the regular model. The deluxe model requires 2.9 hours of direct labour time per unit, and the regular model requires 1.0 hours. Materials and labour costs follow:

	Deluxe	Regular
Direct materials cost per unit	$145	$89
Direct labour cost per hour	21	16

Required:

1. Compute the predetermined overhead rate using direct labour-hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow:

Activity Cost Pool and Activity Measure	Estimated Overhead Cost				Activity
					Deluxe	Regular	Total
Purchase orders (number of orders)	$		132,600		600	1,100	1,700
Rework requests (number of requests)			327,000		500	1,000	1,500
Product testing (number of tests)			262,500		5,000	12,500	17,500
Machine related (machine-hours)			1,320,000		28,000	38,000	66,000
	$		2,042,100

Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools.

3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following:

a. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.)

b. Compute the unit product cost for one unit of each model. (Do not round intermediate calculations and round your answers to 2 decimal places.)