Question

Required information 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 0.70 0.80 Annual Production 26.000 units 90,000 units Rims Posts Additional Information about the company follows: a. Rims require $14 in direct materials per unit, and Posts require $10. b. The direct labor wage rate is $20 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 Estimated Overhead Activity Cost Pool Activity Measure Cost Rims Posts Machine setups Number of setups $ 5.30 70 2 30 Special processing Machine-hours $ 172,800 3.000 0 General factory Direct labor-hours $858.000 5.000 73.000 Total 300 3.000 78,000

Answer 1

Answer

--Requirement 2

Unit product cost of Rims	$                       37.06
Unit product cost of Posts	$                       35.21

--Workings

Manufacturing Overhead cost:	Rims		Posts
Machine Setup	$7,770	70 x $ 111	$25,530	230 x $ 111
Special Processing	$172,800	3000 x $ 57.6	$0	0 x $ 57.6
General factory	$55,000	5000 x $ 11	$803,000	73000 x $ 11
Total Overhead cost allocated	$235,570		$828,530
Total Units	26,000		90,000
Overhead cost per unit	$                         9.06		$                                   9.21
Direct Material	$                       14.00		$                                10.00
Direct Labor Cost	$                       14.00	[0.70 hrs x $ 20]	$                                16.00	[0.80 hrs x $ 20]
Answer: Unit Cost	$                       37.06		$                                35.21