Maple Woods Inc. manufactures lounge chairs available in both a luxury and a standard model. The company has made the standard model for years; the luxury model was introduced several years ago to capture a new segment of the market. Since the introduction of the luxury model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the luxury model have been increasing rapidly.

Overhead is applied to products on the basis of direct labour hours. At the beginning of the current year, management estimated that $$6,393,584$ in overhead costs would be incurred and the company would produce and sell $6,200$ units of the luxury model and $44,320$ units of the standard model. The luxury model requires $3\mathrm{.}0$ hours of direct labour time per unit, and the standard model requires $2\mathrm{.}0$ hours. Materials and labour costs follow:

Luxury Standard

Direct materials cost per unit $$184$ $$144$

Direct labour cost per hour $1518$

Required:

$1.$ Compute the predetermined overhead rate using direct labour hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model. $($Do not round intermediate calculations. Round your answers to $2$ decimal places.$)$

$2.$ An intern suggested that the company use activity$-$based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow:

Activity Cost Pool and

Activity Measure Estimated

Overhead

Cost Activity

Luxury Standard Total

Purchase orders $($number of orders$)$ $ $567,2641,0001,4002,400$

Rework requests $($number of requests$)325,2008001,2002,000$

Product testing $($number of tests$)1,245,1205,0007,00012,000$

Machine related $($machine hours$)4,256,00015,00025,00040,000$

$ $6,393,584$

Compute the activity rate $($i$.$e$.,$ predetermined overhead rate$)$ for each of the activity cost pools.

$3.$ Assume that actual activity is as expected for the year. Using activity$-$based costing, do the following:

a$.$ Determine the total amount of overhead that would be applied to each model for the year. $($Do not round intermediate calculations and round your final answers to nearest whole dollar amount.$)$

b$.$ Compute the unit product cost for one unit of each model. $($Do not round intermediate calculations and round your answers to $2$ decimal places.$)$

$4.$ This part of the question is not part of your Connect assignment.