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Computing ABC Product Costs

Performance Products Corporation provides 2 assets, titanium Rims and also Posts. Data concerning the 2 assets follow:

Direct Labor-Hours Per Unit

Annual Production

Rims

0.40

.20,000 units

Posts

0.20

80.000 units

More indevelopment around the company follows:

a. Rims call for $17 in direct material s per unit. and Posts require $10.

You are watching: Determine the unit product cost of each product according to the abc system

b. The direct labor wage rate is $16 per hour.

c.. Rims are even more complicated to manufacture than Posts, and also they need unique equipment.

d.. The ABC mechanism has actually the complying with task cost pools:

Required:

1. Compute the task price for each task expense pool.

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2. Determine the unit price of each product according to the ABC system, consisting of straight products and also direct labor.


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1)

Activity rates are computed as follows:

Activity Cost Pool

(a)Estimated Overhead Cost

(b)

Expected

Activity

(a) ÷ (b)

Activity

Rate

Machine setups

$21,600

180 setups

$120 per setup

Special processing

$180,000

4,000 MHs

$45 per MH

General factory

$288,000

24,000 DLHs

$12 per DLH


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Alternative ISBN: 9780077317768, 9780077317775, 9780077317782, 9780077317843, 9780077317850, 9780077420147, 9780077551544, 9780077629595, 9780077773304, 9781259249860
Alternate ISBN: 9780077317768, 9780077317775, 9780077317782, 9780077317843, 9780077317850, 9780077420147, 9780077551544, 9780077629595, 9780077773304, 9781259249860
Managerial Accounting (14th Edition) Edit editionSolutions for Chapter 7Problem 12E: Computing ABC Product CostsPerformance Products Corporation provides two products, titanium Rims and also Posts. File regarding the 2 products follow: Direct Labor-Hours Per UnitAnnual ProductionRims0.40.20,000 unitsPosts0.2080.000 unitsAdditional information around the firm follows:a. Rims require $17 in straight material s per unit. and also Posts need $10.b. The straight labor wage price is $16 per hour.c.. Rims are more facility to manufacture than Posts, and they require unique devices.d.. The ABC mechanism has actually the adhering to task price pools:Required:1. Compute the task price for each task price pool.2. Determine the unit cost of each product according to the ABC device, consisting of straight materials and direct labor.…