Question

Help Save & Exercise 4-8 Computing ABC Product Costs (L04-2, LO4-3] The following information applies to the questions displayed below.) Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the t products follow: Direct Labor-Hours per unit 0.50 0.80 Rims Posts Annual Production 25,000 units 88,000 units Additional information about the company follows: a. Rims require $19 in direct materials per unit, and Posts require $17. b. The direct labor wage rate is $15 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 Activity Cost Pool Machine setups Special processing General factory Activity Measure Number of setups Machine-hours Direct labor-hours Estimated Overhead Cost $26.490 $ 163,680 $500,000 Rims 70 4,000 3,000 Posts 430 @ 47,000 Total 500 4,000 50,000 Exercise 4-8 Part 2 < Prev 5 of 7 Next >

Answer 1

Answer

Unit product costs of rims	$ 34.40
Unit product costs of posts	$ 34.60

Calculations:

	Costs	Total activity	Activity Rate	Actual Usage - Rims	Actual Usage - posts	Overheads - Rims	Overheads - Posts
Machine setup	$   26,400.00	500	$          52.80	70	430	$              3,696.00	$            22,704.00
Special processing	$ 163,680.00	4,000	$          40.92	4,000	-	$         163,680.00	$                          -
General factory	$ 500,000.00	50,000	$          10.00	3,000	47,000	$           30,000.00	$          470,000.00
Total	$ 690,080.00					$         197,376.00	$          492,704.00

	Rims	Posts
Overheads	$ 197,376	$     492,704
Direct material	$ 475,000	$ 1,496,000
Direct Labor	$ 187,500	$ 1,056,000
Total costs	$ 859,876	$ 3,044,704
Units	25,000	88,000
Per Unit Costs	$     34.40	$         34.60

In case of any doubt, please comment.