Computing ABC Product Costs
Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:
| Direct Labor-Hours Per Unit | Annual Production |
Rims | 0.40 | .20,000 units |
Posts | 0.20 | 80.000 units |
Additional information about the company follows:
a. Rims require $17 in direct material s per unit. and Posts require $10.
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:
Required:
1. Compute the activity rate for each activity cost pool.
2. Determine the unit cost of each product according to the ABC system, including direct materials and direct labor.
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