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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- Hours per Unit	Annual Production		Total Direct Labor-Hours
Model N 800 XL	3.0	7,000	units	21,000
Model N 500	1.0	12,000	units	12,000
				33,000

Additional information about the company follows:

a. Model N 800 XL requires $65 in direct materials per unit, and Model N 500 requires $25.

b. The direct labor wage rate is $23 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	$ 470,000
Special processing	Machine-hours	190,000
General factory	Direct labor-hours	1,782,000
		$ 2,442,000

Activity Measure	Expected Activity
	Model N 800 XL	Model N 500	Total
Number of setups	200	300	500
Machine-hours	20,000	0	20,000
Direct labor-hours	21,000	12,000	33,000

Predetermined overhead rate per DLH

Model N 800

XLModel N 500