Puget World, Inc., manufactures two models of television sets, the N 800 XL mode

Question

Puget World, Inc., manufactures two models of television sets, the N 800 XL model and the N 500 model. Data regarding the two products follow:

Model N 800 XL requires $71 in direct materials per unit, and Model N 500 requires $52.

The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products.

Model N 800 XL is more complex to manufacture than Model N 500 and requires the use of special equipment. Consequently, the company is considering the use of activity-based costing to assign manufacturing overhead cost to products. Three activity cost pools have been identified as follows:

Expected Activity

Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)

Determine the amount of overhead cost that would be assigned to each model using the activity-based costing system. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Compute the unit product cost of each model. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Puget World, Inc., manufactures two models of television sets, the N 800 XL model and the N 500 model. Data regarding the two products follow:

Explanation / Answer

[The following information applies to the questions displayed below.]

Puget World, Inc., manufactures two models of television sets, the N 800 XL model and the N
500 model. Data regarding the two products follow:

Direct Labor- Total Direct
Hours per Unit Annual Production Labor-Hours
Model N 800 XL 1.8 5,100 units 9,180
Model N 500 0.9 29,500 units 26,550

35,730

Additional information about the company follows:

a. Model N 800 XL requires $73 in direct materials per unit, and Model N 500 requires $54.
b. The direct labor wage rate is $11 per hour.
c. The company has always used direct labor-hours as the base for applying manufacturing
overhead cost to products.
d. Model N 800 XL is more complex to manufacture than Model N 500 and requires the use of
special equipment. Consequently, the company is considering the use of activity-based
costing to assign manufacturing overhead cost to products. Three activity cost pools have
been identified as follows:

Activity Estimated
Activity Cost Pool Measure Overhead Cost
Machine setups Number of setups $ 355,000
Special processing Machine-hours 173,000
General factory Direct labor-hours 1,262,000

$ 1,790,000

Expected Activity
Model N 800 Model N
Activity Measure Total
XL 500
Number of setups 50 100 150
Machine-hours 12,000 0 12,000
Direct labor-hours 9,180 26,550 35,730
2-16-2011
Required:
1. Assume that the company continues to use direct labor-hours as the base for applying
overhead cost to products.(Do not round intermediate calculations. Round your answers
to 2 decimal places.)

a. Compute the predetermined overhead rate.

Predetermined overhead
$ per DLH
rate

b. Compute the unit product cost of each model.

Model N 800
$
XL
Model N 500 $

2. Assume that the company decides to use activity-based costing to assign manufacturing
overhead cost to products.

a(1) Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal
places.)

per
Machine setup $ setup
Special processing per MH
$
per
General factory $ DLH

a(2) Determine the amount of overhead cost that would be assigned to each model using the
activity-based costing system. (Do not round intermediate calculations. Round your
answers to 2 decimal places.)

Model N 800
Model N 500
XL
Overhead cost per
$ $
unit

b. Compute the unit product cost of each model. (Do not round intermediate calculations.
Round your answers to 2 decimal places.)
Model N 800
Model N 500
XL
Unit product cost $ $

The following information applies to the questions displayed below.]

Adria Company recently implemented an activity-based costing system. At the beginning of the
year, management made the following estimates of cost and activity in the company%u2019s five
activity cost pools:

Expected
Activity Overhead Expected
Activity Cost Pool Measure Cost Activity
Labor-related Direct labor-hours $154,000 35,000 DLHs
Purchase orders Number of orders $ 71,370 900 orders
Material receipts Number of receipts $157,220 1,400 receipts
Relay assembly Number of relays $302,400 10,500 relays
General factory Machine-hours $777,000 70,000 MHs

Required:
1. Compute the activity rate for each of the activity cost pools.(Round your answer to 2
decimal places.)

Activity Cost Pool Activity Rate
Labor-related per DLH
$
Purchase orders per order
$
Material receipts per receipt
$
Relay assembly per relay
$
General factory per MH
$
referencesebook & resources

The expected activity for the year was distributed among the company's four products as
2.
follows:
Expected Activity

Activity Cost Pool Product A Product B Product C Product D
Labor-related (DLHs) 5,900 7,700 10,200 8,200
Production orders
135 290 90 435
(orders)
Material receipts
420 175 210 495
(receipts)
Relay assembly (relay) 0 4,250 0 7,250
General factory (MHs) 10,400 19,200 17,100 21,300

Using the ABC data, determine the total amount of overhead cost assigned to each product. (Do
not round intermediate calculations. Round your answers to the nearest dollar amount.)

Product A $
Product B $
Product C $
Product D $

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.