cost accounts

Precision Manufacturing Inc. ( PMI ) makes two  types  of industrial component parts—the EX300 and the TX500. It annually produces 60,000 units of EX300 and 12,500 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:

EX300    

TX500   

Total    

  Direct materials

$

366,325     

$

162,550     

$

528,875     

  Direct labor

$

120,000     

$

42,500     

$

162,500     

The company is considering implementing an activity-based costing system that distributes all of its manufacturing  overhead to four activities as shown below:

Activity Cost Pool (and Activity Measure)

Manufacturing  Overhead  

Activity

EX300

TX500

Total    

  Machining (machine-hours)

$

198,250     

90,000   

62,500   

152,500        

  Setups (setup hours)

150,000     

75   

300   

375        

  Product-level (number of products)

100,250     

1   

1   

2        

  General factory (direct labor dollars)

60,125     

$

120,000   

$

42,500   

$

162,500        

  Total manufacturing  overhead cost

$

508,625     

Required:

1-a.

Compute the plantwide overhead rate that would be used in the company’s conventional cost system. (Round your answer to 2 decimal places.)

  Predetermined overhead rate

$   

per DL$

1-b.

Using the plantwide rate, compute the unit product cost for each product. (Do not round intermediate calculations. Round your  answers to  2 decimal places.)

EX300

TX500

  Unit product cost

$   

$   

2-a.

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

 Activity Cost Pools

            Activity Rate        

  Machining

$ 

   per MH

  Setups

$ 

   per setup hr.

  Product-level

$ 

   per product

  General factory

$ 

   per DL$

2-b.

Using the activity rates, compute the unit product cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

    EX300

    TX500  

  Unit product cost

$   

$   

Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:

Mercon  

Wurcon  

  Direct materials cost per unit

$

10.00   

$

8.00   

  Direct  labor cost  per unit

$

3.00   

$

3.75   

  Direct labor-hours per unit

0.20   

0.25   

  Number of units produced

10,000   

40,000   

These products are customized to some  degree for  specific customers.

Required:

1.

The company's  manufacturing   overhead costs  for the year are expected to be $336,000. Using the company's conventional costing system, compute the unit product costs for the two products. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)

Mercon

Wurcon

  Unit product cost

$   

$   

2.

Management is considering an activity-based costing system in which half of the overhead would continue  to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:

Mercon

Wurcon

Total

   Engineering design  time (in hours)

4,000

4,000

8,000

Compute the unit product costs for the two products using the proposed ABC system. (Do not round intermediate calculation. Round your final answers to 2 decimal places.)

Mercon

Wurcon

  Unit product cost

$   

$   

Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates:

  Activity Cost Pool

        Activity Rates

  Labor-related

$

7.00

 per direct labor-hour

  Machine-related

$

3.00

 per machine-hour

  Machine setups

$

40.00

 per setup

   Production  orders

$

160.00

 per order

   Shipments

$

120.00

 per shipment

  General factory

$

4.00

 per direct labor-hour

Cost and activity data have been supplied for the following products:

J78  

B52  

  Direct materials cost per unit

$

6.50   

$

31.00   

  Direct  labor cost  per unit

$

3.75   

$

6.00   

  Number of units produced per year

4,000   

100   

Total ExpectedActivity

 J78

 B52

  Direct labor-hours

1,000

40  

  Machine-hours

3,200

30  

  Machine setups

5

1  

  Production orders

5

1  

  Shipments

10

1  

Required:

Compute the unit product cost of each product listed above. (Round your  answers to  2 decimal places.)

J78

B52

  Unit product cost

$  

$