Performance Products Corporation makes two products, titanium Rims and Posts. Da
ID: 2353485 • Letter: P
Question
Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:Direct
Labor-Hours Annual
per unit Production
Rims 0.40 21,000 units
Posts 0.20 76,000 units
Additional information about the company follows:
a. Rims require $17 in direct materials per unit, and Posts require $8.
b. The direct labor wage rate is $17 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:
Estimated Activity
Activity Cost Pool Activity Measure Estimated overhead Cost Rims Posts Total
Machine setups Number of setups $ 22,000 91 70 161
Special processing Machine-hours $ 180,000 4,400 0 4,400
General factory Direct labor-hours $ 267,000 16,800 30,400 47,200
1.
Compute the activity rate for each activity cost pool. (Round your final answers to 2 decimal places.)
Activity Cost Pool Activity Rate
Machine setups ?per setup
Special processing ?per setup
General factory ?per setup
2.
Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)
Unit product cost of Rims ?
Unit product cost of Posts ?
Explanation / Answer
1. Activity rates: Machine setups - $21,600/260 = $120 per setup Spl Processing - $180,000/4000 = $45 per machine hour General factory - $288,000/24,000 = $12 per direct labor hour 2. Unit product costs Cost element ----- Rims ----- Posts Direct Materials -- $17.00----- $10.00 Direct labor (16x.40) 6.40 ----- 3.20 Overheads Setup @120 ---- 1200 ------960 Proeceesing @45 General @12---- 192 -----192 Total costs $1,451.40 -- $1,165.20