[The following information applies to the questions displayed below.]

Puget World, Inc., manufactures two models of television sets, the N 800 XL model and the N 500 model. Data regarding the two products follow:

	Direct Labor- Hours per Unit	Annual Production	Total Direct Labor-Hours
Model N 800 XL	3.0	3,000 units	9,000
Model N 500	1.0	12,000 units	12,000
			21,000

Additional information about the company follows:

a. Model N 800 XL requires $75 in direct materials per unit, and Model N 500 requires $25.

b. The direct labor wage rate is $18 per hour.

c. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products.

d. Model N 800 XL is more complex to manufacture than Model N 500 and requires the use of special equipment. Consequently, the company is considering the use of activity-based costing to assign manufacturing overhead cost to products. Three activity cost pools have been identified as follows:

Activity Cost Pool	Activity Measure	Estimated Overhead Cost
Machine setups	Number of setups	$	360,000
Special processing	Machine-hours		165,000
General factory	Direct labor-hours		1,260,000
		$	1,785,000

	Expected Activity
Activity Measure	Model N 800 XL	Model N 500	Total
Number of setups	100	200	300
Machine-hours	16,500	0	16,500
Direct labor-hours	9,000	12,000	21,000

Required:

1. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products.

a. Compute the predetermined overhead rate.

b. Compute the unit product cost of each model.