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 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 Activity Deluxe Regular Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine-related (machine hours) Total Estimated Overhead Estimated Overhead Cost $ 100,000 220,000 480,000 1,610,000 $2,410,000 300 orders 500 requests 6,000 tests 16,000 hours 700 orders 600 requests 10,000 tests 24,250 hours 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

please provide detail explanations

Answer 1

rate positively .. let me know if you need any clarification..

	ans 1	Computation of activity rate
			i	ii	iii	iv=i/ii
			Estimated overhead	Estimated activity total	pool	rate
		Purchase order	100000	1000	order	100
		Rework request	220000	1100	request	200
		product testing	480000	16000	test	30
		machine related	1610000	40250	hours	40
			2410000
	ans 2		Delux		Regular
		Purchase order	30000	100*300	70000	100*700
		Rework request	100000	200*500	120000	200*600
		product testing	180000	30*6000	300000	30*10000
		machine related	640000	40*16000	970000	40*24250
	i	total overhead	950000		1460000
	ii	Total unit =	9500		20000
	iii=i/ii	Unit cost	100		73
	ans 3	Total unit cost for each model
			Delux		Regular
		Direct material	155		124
		Labor	20		11
		Overhead	100		73
		Unit cost	275		208