Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 51,000 units of EX300 and 11,600 units of TX500. The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: Direct materials. Direct labor Activity Cost Pool (and Activity Measure) Machining (machine-hours) The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Setups (setup hours) Product-level (number of products) EX300 $ 357,325 $ 111,000 General factory (direct labor dollars) Total manufacturing overhead cost Req 1A Req 1B Unit product cost Complete this question by entering your answers in the tabs below. 2-a. Compute the activity rate for each activity cost pool. 2-b. Using the activity rates, compute the unit product cost for each product. EX300 TX500 $ 153,550 $ 38,000 Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. Req 2A Total $ 510,875 $ 149,000 Req 2B TX500 Manufacturing Overhead $ 152,900 74,400 76,660 38,740 $ 342,700 < Req 2A EX300 81,000 30 1 $ 111,000 Using the activity rates, compute the unit product cost for each product. (Round your intermediate calculations and final answers to 2 decimal places.) Activity TX500 58,000 210 1 $ 38,000 Total 139,000 240 2 $ 149,000 Req 2B >
Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually produces 51,000 units of EX300 and 11,600 units of TX500. The company's conventional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: Direct materials. Direct labor Activity Cost Pool (and Activity Measure) Machining (machine-hours) The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Setups (setup hours) Product-level (number of products) EX300 $ 357,325 $ 111,000 General factory (direct labor dollars) Total manufacturing overhead cost Req 1A Req 1B Unit product cost Complete this question by entering your answers in the tabs below. 2-a. Compute the activity rate for each activity cost pool. 2-b. Using the activity rates, compute the unit product cost for each product. EX300 TX500 $ 153,550 $ 38,000 Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 1-b. Using the plantwide rate, compute the unit product cost for each product. Req 2A Total $ 510,875 $ 149,000 Req 2B TX500 Manufacturing Overhead $ 152,900 74,400 76,660 38,740 $ 342,700 < Req 2A EX300 81,000 30 1 $ 111,000 Using the activity rates, compute the unit product cost for each product. (Round your intermediate calculations and final answers to 2 decimal places.) Activity TX500 58,000 210 1 $ 38,000 Total 139,000 240 2 $ 149,000 Req 2B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Precision Manufacturing Incorporated (PMI) makes two types of industrial component parts-the EX300 and the TX500. It annually
produces 51,000 units of EX300 and 11,600 units of TX500. The company's conventional cost system allocates manufacturing
overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating
to the company's two product lines is shown below:
Direct materials.
Direct labor
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four
activities as shown below:
Setups (setup hours)
Product-level (number of products)
EX300
$ 357,325
$ 111,000
General factory (direct labor dollars)
Total manufacturing overhead cost
Req 1A
Req 1B
Unit product cost
Complete this question by entering your answers in the tabs below.
2-a. Compute the activity rate for each activity cost pool.
2-b. Using the activity rates, compute the unit product cost for each product.
EX300
TX500
$ 153,550
$ 38,000
Req 2A
Total
$ 510,875
$ 149,000
Required:
1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system.
1-b. Using the plantwide rate, compute the unit product cost for each product.
Req 2B
TX500
Manufacturing
Overhead
$ 152,900
74,400
76,660
38,740
$ 342,700
< Req 2A
EX300
81,000
$ 111,000
30
1
Using the activity rates, compute the unit product cost for each product. (Round your intermediate calculations and final
answers to 2 decimal places.)
Activity
TX500
58,000
210
1
Req 2B >
$ 38,000
Total
139,000
240
2
$ 149,000
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