2-b. Using the activity rates, compute the unit product cost for each product.

Precision Manufacturing Incorporated (PMI) makes two types of industrial component partsthe 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: Direct materials Direct labor EX300 $ 366,325 $ 120,000 TX500 $ 162,550 $ 42,500 Total $ 528,875 $ 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) Machining (machine-hours) Setups (setup hours) Product-level (number of products) General factory (direct labor dollars) Total manufacturing overhead cost Manufacturing Overhead $ 198,250 150,000 100, 250 60,125 $ 508,625 EX300 90,000 75 1 $ 120,000 Activity TX500 62,500 300 1 $ 42,500 Total 152,500 375 2 $ 162,500