Question: Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow:
DLH per unit Annual Production
Rims 0.40 20,000 units
Posts 0.20 80,000 units
Additional information about the company follows:
a. Rims require $17 in direct materials per unit, and Posts require $10.
b. The direct labor wage rate is $16 per hour.
c. Rims are more complex to manufacture than Posts and they require special equipment.
d. The ABC system has the following activity cost pools:
Activity Cost Pool Activity Measure Cost Rims Posts Total
Machine setups Number of Setups $21,000 100 80 180
Special processing Machine-hours $180,000 4,000 0 4,000
General factory Direct labor-hours $288,000 8,000 16,000 24,000
1. Copute the activity rate for each activity cost pool
Activity Cost Pool Activity Rate
Machine setups $__________ per setup
Special processing $__________ per MH
General factory $__________ per DLH
2. Determine the unit product cost of each product according to the ABC system.
Unit product cost of Rims $____________
Unit product cost of Posts $____________
I have already figured out problem 1.
Maching setups $116.67 per setup
Special processing $45 per MH
General factory $12 per DLH
I can not figure out problem number 2. I have tried so many different variations, but I can not seem to get the right answer. PLEASE HELP! Thanks a lot! Edit
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