Question

Required information Exercise 4-8 Computing ABC Product Costs [LO4-2, L04-3] {The following information applies to the questions displayed below.) Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Direct Labor-Hours per unit 0.30 0.20 Annual Production 29,000 units 86,000 units Rims Posts Additional information about the company follows: a. Rims require $18 in direct materials per unit, and Posts require $14. b. The direct labor wage rate is $16 per hour. c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Estimated Activity Rims 100 Estimated Overhead Cost $ 42,140 $ 131,580 $1,479,000 Activity Cost Pool Machine setups Special processing General factory Posts 100 Activity Measure Number of setups Machine-hours Direct labor-hours Total 200 2,000 87,000 2,000 9,000 78,000 Exercise 4-8 Part 2 2. Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Unit product cost of Rims Unit product cost of Posts

Answer 1

1)	Activity rates
	Activity cost pool		Estimated	total	activity
			oh cost		rate
			(A)	(B)	C=A/B
	Machine setups		42,140	200	210.7	per setup
	Special processing		131,580	2,000	65.79	per machine hr
	General factory		1,479,000	87,000	17	per DLH's
			1,652,720
2)	unit product cost
	RIMS
						total	per unit
	Direct materials		(29000*18)			522000	18
	Direct labor		(29000*.3)*16			139200	4.8
	overhead
	Machine setups		(100*210.7)			21070
	Special processing		(2000*65.79)			131580
	General factory		(9000*17)			153000
	total overhead cost					305650	10.54
	total product cost (A)					966850
	total units produced (B)					29,000
	unit product cost C = A/B					33.34	33.34	answer
	POSTS
	Direct materials		(86000*14)			1204000	14
	Direct labor		(86000*.2)*16			275200	3.2
	overhead
	Machine setups		(100*210.7)			21070
	Special processing					0
	General factory		(78000*17)			1326000
	total overhead cost					1347070	15.66
	total product cost (A)					2826270
	total units produced (B)					86,000
	unit product cost C = A/B					32.86	32.86
						RIMS	POSTS
	Direct materials					17	14
	direct labor					4.8	3.2
	overhead					10.54	15.66
	unit cost					32.34	32.86