Model N 800 XL Model N 500 Activity Cost Pool Machine setups Special processing General factory Direct Labor- Hours per Unit. 3.0 1.0 Activity Measure Number of setups Machine-hours Direct labor-hours Annual Production 4,000 units 13,000 units Additional information about the company follows: a. Model N 800 XL requires $70 in direct materials per unit, and Model N 500 requires $30. b. The direct labor wage rate is $17 per hour. c. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to d. Model N 800 XL is more complex to manufacture than Model N 500 and requires the use of special equip Consequently, the company is considering the use of activity-based costing to assign manufacturing overhea products. Three activity cost pools have been identified as follows: Activity Measure Number of setups Machine-hours Direct labor-hours Total Direct Labor-Hours Model N 800 XL 150 20,000 12,000 12,000 13,000 25,000 Estimated Overhead Cost $ 520,000 235,000 1,445,000 $ 2,200,000 Expected Activity Model N 500 250 0 13,000 Total 400 20,000 25,000

Model N 800 XL Model N 500 Activity Cost Pool Machine setups Special processing General factory Direct Labor- Hours per Unit. 3.0 1.0 Activity Measure Number of setups Machine-hours Direct labor-hours Annual Production 4,000 units 13,000 units Additional information about the company follows: a. Model N 800 XL requires $70 in direct materials per unit, and Model N 500 requires $30. b. The direct labor wage rate is $17 per hour. c. The company has always used direct labor-hours as the base for applying manufacturing overhead cost to d. Model N 800 XL is more complex to manufacture than Model N 500 and requires the use of special equip Consequently, the company is considering the use of activity-based costing to assign manufacturing overhea products. Three activity cost pools have been identified as follows: Activity Measure Number of setups Machine-hours Direct labor-hours Total Direct Labor-Hours Model N 800 XL 150 20,000 12,000 12,000 13,000 25,000 Estimated Overhead Cost $ 520,000 235,000 1,445,000 $ 2,200,000 Expected Activity Model N 500 250 0 13,000 Total 400 20,000 25,000

Name: Assume that the company continues to use direct labor hours as the bas
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Description: Assume that the company continues to use direct labor hours as the base for applying overhead cost to products. Compute the unit production cost for each model (model N 800XL and model N500) Model N 800 XLModel N 500Direct Labor-Hours per Unit3.01.0A

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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