Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It...
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Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 57,000 units of EX300 and 12,200 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: Direct materials Direct labor EX300 $363,325 $ 117,000 The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Activity Coat Pool (and Activity Measure) Machining (nachine-hours) Setups (setup hours) Product-level (number of products) Total TX500 $ 159,550 $ 522,875 $ 41,000 $ 158,000 General factory (direct labor dollars) Total manufacturing overhead cost Manufacturing Overhead. $ 214,600 122, 100 69,360 52,140 $ 458,200 EX300 67,000 60 1 $117.000 Activity TX500 61,000 270 1 9:41,000 Total 140,000 Required: -a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. 2-a. Compute the activity rate for each activity cost pool. 2-b. Using the activity rates, compute the unit product cost for each product. 330 2 $150,000 Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 57,000 units of EX300 and 12,200 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: Direct materials Direct labor EX300 $363,325 $ 117,000 The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Activity Coat Pool (and Activity Measure) Machining (nachine-hours) Setups (setup hours) Product-level (number of products) Total TX500 $ 159,550 $ 522,875 $ 41,000 $ 158,000 General factory (direct labor dollars) Total manufacturing overhead cost Manufacturing Overhead. $ 214,600 122, 100 69,360 52,140 $ 458,200 EX300 67,000 60 1 $117.000 Activity TX500 61,000 270 1 9:41,000 Total 140,000 Required: -a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. 2-a. Compute the activity rate for each activity cost pool. 2-b. Using the activity rates, compute the unit product cost for each product. 330 2 $150,000
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a Plantwide overhead rate using direct labor dollars as allocation base Total manufacturing overhead cost 458200 Total direct labor cost 200550 159550 ... View the full answer
Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
Posted Date:
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