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 $73 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

Required:

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:

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: Additional information about the company follows:

Explanation / Answer

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 rate

$ per DLH

b.

Compute the unit product cost of each model.

Model N 800 XL

$

Model N 500

$

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8.

value:
12.50 points

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.)

Machine setup

$

per setup

Special processing

$

per MH

General factory

$

per 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 XL

Model N 500

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 XL

Model N 500

Unit product cost

$

$

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.)

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