Question
Siegel Corporation produces a product that is available in both a Deluxe and a Regular model. It is estimated that $2,410,000 in manufacturing overhead costs
Siegel Corporation produces a product that is available in both a Deluxe and a Regular model. It is estimated that $2,410,000 in manufacturing overhead costs will be incurred and that the company will produce 9,500 units of the Deluxe model and 20,000 units of the Regular model.
The Direct Materials and Direct Labor costs per unit are as follows:
Deluxe Regular
Direct Materials cost per unit. $155 $124
Direct Labor cost per unit.. $20 $11
The company uses Activity-Based Costing to allocate manufacturing overhead costs to its products. Four activity cost pools and their associated activities are as follows:
Estimated Estimated Activity
Overhead Deluxe Regular
Activity Cost Pool and Activity Measure Cost
Purchase orders (number of orders) $ 100,000 300 orders 700 orders
Rework requests (number of requests) 220,000 500 requests 600 requests
Product testing (number of tests) 480,000 6,000 tests 10,000 tests
Machine-related (machine hours) 1,610,000 16,000 hours 24,250 hours
Total Estimated Overhead $2,410,000
Compute the following:
- The activity rate for each Activity Cost Pool;
- The unit Manufacturing Overhead cost for each model;
- The unit product cost for each model
Siegel Corporation produces a product that is available in both a Deluxe and a Regular model. It is estimated that $2,410,000 in manufacturing overhead costs will be incurred and that the company will produce 9,500 units of the Deluxe model and 20,000 units of the Regular model.
The Direct Materials and Direct Labor costs per unit are as follows:
Deluxe Regular
Direct Materials cost per unit. $155 $124
Direct Labor cost per unit.. $20 $11
The company uses Activity-Based Costing to allocate manufacturing overhead costs to its products. Four activity cost pools and their associated activities are as follows:
Estimated Estimated Activity
Overhead Deluxe Regular
Activity Cost Pool and Activity Measure Cost
Purchase orders (number of orders) $ 100,000 300 orders 700 orders
Rework requests (number of requests) 220,000 500 requests 600 requests
Product testing (number of tests) 480,000 6,000 tests 10,000 tests
Machine-related (machine hours) 1,610,000 16,000 hours 24,250 hours
Total Estimated Overhead $2,410,000
Compute the following:
- The activity rate for each Activity Cost Pool;
- The unit Manufacturing Overhead cost for each model;
- The unit product cost for each model
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