0 Chapter 4: Homework Saved Help Save & Exit Submit Chapter 4: Homework 0 Check my work Marine, Inc., manufactures a product that is available in both a flexible and a rigid model. The company has made the rigid model for years, the flexible model was introduced several years ago to tap a new segment of the market. Since introduction of the model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the flexible model have been increasing rapidly. 148 points Overhead is applied to products on the basis of direct labor-hours. At the beginning of the current year, management estimated that $506,000 in overhead costs would be incurred and the company would produce and sel 1,500 units of the fiexible model and 8,500 units of the regular model. The flexible model requires 2.2 hours of direct labor time per unit, and the regular model requires 110 hours. Direct materials and labor costs per unit are given below: eBook Print Flexible Rigid Direct materials cost per unit Direct labor cost per unit $115 $ 35 $ 60 s 10 Required: 1-a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products 1-b. Compute the unit product cost for one unit of each model. 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows: Expected Activity Estimated Activity Cost Pool and Aetivity Measure Purchase orders (number of orders) Rework requests (nunber of requests) Product testing (number of tests) Kachine related (machine-hours) Overhead Cost Flexible s 21,000 11, 000 250,000 224,000 $506, 000 110 65 950 1,000 Rigid Total 525 275 1.050 2,000 2,200 3,200 415 210