unit level, batch level, product level or facility level.

Preston Inc manufacturer and sell two types of wooden deck chairs: Deluxe and Tourist. Annal sales I uints, direct labor (DLHs) per unit, and total direct labor hours per year are provided below Deluxe deck chair: 2000 units x 5dlhs per uit 10000 Tourist deck chair 10000 units x 4 dlhs per unit 40000 Total Direct lavour hours 50000 Costs for direct material and direct labor for one unit of each product are below 6 Deluxe Tourist 7 Direct material 25 17 8 Direct labour 60 48 9 Manufacturing overheads costs total $800000 each year. The break down of these costs among the company six activities cost pool is below. 10 Expected acitvity 11 Activity cost pools and activity measure Est overhead cost Deluxe Tourist Total 12 Labor related (dlhs) 80000 10000 40000 50000 13 Machine (setup no of set up) 150000 3000 2000 5000 14 Parts administration( no of parts) 160000 50 30 80 15 Production orders(no of orders) 70000 100 300 400 16 Materail receipts (no of receipts) 90000 150 600 750 17 General factory(machine hojurs) 250000 12000 28000 40000 18 800000 19 1. Identify each activity as unit leve, batch leve, product level or facility level 20 2. Assume that the company applies overhead cost to product on the basis of direct labour hours. 21 A. compare the predetrimed overhead rate. 22 B determine the unit product cost of each product using predetermined overhead rate computed in 2 (A) 23 3. Assume that company uses activity based costing to compute overhead rates 24 a. compute the activity rate for each of the six activities listed above 25 b. using the rates developed in (3)(a) above determine the amount of overhead cost that would be assigned to unit of each product 26 c. Determine the unit product cost of each product and compare this cost to the cost computed in (2) (b) 27