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## Problem $4-12($Algo$)$ Contrasting ABC and Conventional Product Cost $[$LO$4-2,$ LO$4-3,$ LO$4-4]$

$**$Precision Manufacturing Incorporated $($PMI$)**$ makes two types of industrial component parts$$the EX$300$ and the TX$500.$ It annually produces $66,000$ units of EX$300$ and $13,000$ units of TX$500.$ 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:

$||$ EX$300|$ TX$500|$ Total $|$

$|---------------------------|-------------|-------------|-------------|$

$|$ Direct materials $|$ $$372,325|$ $$168,550|$ $$540,875|$

$|$ Direct labor $|$ $$126,000|$ $$45,500|$ $$171,500|$

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 $|$ EX$300|$ TX$500|$ Total $|$

$|-------------------------------------------|-----------------------|-------|-------|-------|$

$|$ Machining $($machine$-$hours$)|$ $$211,875|96,000|65,600|161,600|$

$|$ Setup $($setup hours$)|$ $$159,600|1|360|361|$

$|$ Product$-$Level $($number of products$)|$ $$375,000|1|1|2|$

$|$ General Factory $($direct labor dollars$)|$ $$247,175|$ $$126,000|$ $$45,500|$ $$171,500|$

$|$ Total $|$ $$993,650||||$

$**$Required:$**$

$1-$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.

Complete this question by entering your answers in the tabs below.

$**$Req $1$A$**$: Compute the plantwide overhead rate that would be used in the company's conventional cost system. $($Round your answer to $2$ decimal places.$)$

$**$Req $1$B$**$: Using the plantwide rate, compute the unit product cost for each product.

$**$Req $2$A$**$: Compute the activity rate for each activity cost pool.

$**$Req $2$B$**$: Using the activity rates, compute the unit product cost for each product.

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