Question

Precision Manufacturing Inc. (PMI) makes two types of industrial component parts--the EX300 and the TX500. It annually produces 66,000 units of EX300 and 13,100 units of TX500. The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: EX300 Direct materials $372,325 $168,550 $540,875 Direct labor $126.000 $ 45,500 $171,500 TX500 Total The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below. Activity Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setupe (setup hours) Product-level (number of products) General factory (direct labor dollars) Total manufacturing overhead cost Manufacturing Overhead $201.875 213.900 141,600 23.175 $634,550 EX300 96,000 105 1 $126.000 7X500 65,500 360 1 $45,500 Total 161,500 465 2 $171,500 Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. 2-a. Compute the activity rate for each activity cost pool 2.b. Using the activity rates, compute the unit product cost for each product Complete this question by entering your answers in the tabs below. Red LA Reg 13 Red 2A Reg 28 Compute the plantwide overhead rate that would be used in the companys conventional cost system (Round your answer to 2 decimal places.) Predetermined overhead role per DLS KH Reg 10 >

Answer 1

Computation of predetermined oh, Unit Product Cost and Activity rates: 1-a) Particulars Total OH Total direct labor cost Predetermined OH Rate Amount $ 6,34,550.00 $ 1,71,500.00 $ 3.70 per dollar value 1-b) Particulars EX 300 TX 500 Direct material Direct Labor OH Total product cost No. of units Cost per unit $ $ $ $ 3,72,325.00$ 1,26,000.00 $ 4,66,200.00 $ 9,64,525.00 $ 66000 14.61 $ 1,68,550.00 45,500.00 1,68,350.00 3,82,400.00 13100 29.19 $ 2-a) Activity Pool OH Total Rate Machining Setup Product level General factory machine hours setup hours No. of products direct labor cost $ 2,01,875.00 $ 2,13,900.00 $ 1,41,600.00 $ 77,175.00 161500 $ 465 $ 2 $ 171500 $ 1.25 460.00 70,800.00 0.45 2-b) Particulars EX 300 TX 500 Direct material Direct Labor OH Total product cost No. of units Cost per unit $ $ $ $ 3,72,325.00 $ 1,26,000.00 $ 2,95,800.00 $ 7,94,125.00 $ 66000 12.03 $ 1,68,550.00 45,500.00 3,38,750.00 5,52,800.00 13100 42.20 $ Working notes for OH Cost: Particulars Machining Setup Product level General factory Total EX 300 TX 500 $ 1,20,000.00 $ 81,875.00 $ 48,300.00 $ 1,65,600.00 $ 70,800.00 $ 70,800.00 $ 56,700.00 $ 20,475.00 $ 2,95,800.00 $ 3,38,750.00 Kindly Comment down for any clarifications/ queries and please upvote.