Question

Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:

   

	Direct Labor-Hours per unit	Annual Production
Rims	0.30	21,000 units
Posts	0.50	74,000 units

Additional information about the company follows:

1. Rims require $15 in direct materials per unit, and Posts require $12.
2. The direct labor wage rate is $16 per hour.
3. Rims are more complex to manufacture than Posts and they require special equipment.
4. The ABC system has the following activity cost pools:

		Estimated Activity
Activity Cost Pool	Activity Measure	Estimated Overhead Cost		Rims	Posts	Total
Machine setups	Number of setups	$	37,000	120	280	400
Special processing	Machine-hours	$	146,520	4,000	0	4,000
General factory	Direct labor-hours	$	672,000	10,000	32,000	42,000

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.)

Answer 1

Calculate Unit product cost

	Rims	Posts
Machine setups	37000/400*120 = 11100	25900
Special processing	146520	0
General factory	672000/42000*10000 = 160000	512000
Total overhead	317620	537900
Unit	21000	74000
Overhead cost per unit	15.12	7.27
Direct material	15	12
Direct labor	16*.30 = 4.8	8
Unit product cost	34.92	27.27