Precision Manufacturing Inc. (PMI) makes two types of industrial component parts

Question

Precision Manufacturing Inc. (PMI) makes two types of industrial component partsA "the EX300 and the TX500. It annually produces 56,000 units of EX300 and 12,100 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: The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Compute the plantwide overhead rate that would be used in the company's conventional cost system. Using the plantwide rate, compute the unit product cost for each product. Compute the activity rate for each activity cost pool. Using the activity rates, compute the unit product cost for each product.

Explanation / Answer

Answer no . 1(a)

Calculation of Plantwide OH rate

Answer :1(b)

Note : Allocation of Manufacturing overhead cost product wise

Answer no . 2(a)

Answer no 2(b)

Note :

Total Manufacturing Overhead Cost $438,200 Direct labour dollars $156,500 Plantwide OH rate (per Dollar) $       2.80

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