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- Hours per Unit Annual Production Total Direct Labor-Hours Model N 800 XL 1.8 4,800 units 8,640 Model N 500 0.9 28,000 units 25,200 33,840 Additional information about the company follows: a. Model N 800 XL requires $71 in direct materials per unit, and Model N 500 requires $52. 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 Cost Pool Activity Measure Estimated Overhead Cost Machine setups Number of setups $ 356,000 Special processing Machine-hours 176,000 General factory Direct labor-hours 1,268,000 $ 1,800,000 Expected Activity Activity Measure Model N 800 XL Model N 500 Total Number of setups 50 100 150 Machine-hours 12,000 0 12,000 Direct labor-hours 8,640 25,200 33,840 2-16-2011 1. Assume that the company continues to use direct labor-hours as the base for applying overhead cost to products.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 $ 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.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.Model N 800 XL Model N 500 Overhead cost per unit $ $ b. Compute the unit product cost of each model. Model N 800 XL Model N 500 Unit product cost $ $?