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[The following information applies to the questions displayed below.] Puget World, Incorporated, manufactures two models of television sets, the N 800 XL model and

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[The following information applies to the questions displayed below.] Puget World, Incorporated, manufactures two models of television sets, the N 800 XL model and the N 500 model. Data regarding the two products follow: Direct Labor- Total Direct Model N 800 XL Model N 500 Hours per Unit 3.5 1.2 Annual Production Labor-Hours 4,500 units 15,750 12,500 units 15,000 30,750 Additional information about the company follows: a. Model N 800 XL requires $60 in direct materials per unit, and Model N 500 requires $15. b. The direct labor wage rate is $19 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 Machine setups Special processing General factory Activity Measure Number of setups Machine-hours Direct labor-hours Estimated Overhead Cost $ 420,000 195,000 1,230,000 $ 1,845,000 Activity Measure Number of setups Machine-hours Direct labor-hours Expected Activity Model N 800 XL 120 15,000 15,750 Model N 500 300 0 Total 15,000 420 15,000 30,750 2. Assume that the company decides to use activity-based costing to assign manufacturing overhead cost to products. a(1). Compute the activity rate for each activity cost pool. a(2). Determine the amount of overhead cost that would be assigned to each model using the activity-based costing system. b. Compute the unit product cost of each model.

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