Question

Exercise 7-9 Computing Activity-Based Costing Product Costs (LO2, LO3] High-Calibre Products Corporation makes two products: titanium rims and posts. Data regarding the two products follow: Direct Labour- Hours per Unit 0.60 @.30 Annual Production 38,000 units 170,000 units Rims Posts Additional information about the company follows: a. Rims require $15 in direct materials per unit and posts require $8. b. The direct labour 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 Rims Posts Estimated Overhead Cost $40,320 $281, 200 $738,000 170 Activity Measure Number of setups Machine-hours Direct labour-hours Total 360 7,600 73,800 190 7,600 22,800 Activity Cost Pool Machine setups Special processing General factory 51,000

Answer 1

ANSWER:

As per the given Question

1
Activity cost pool	Activity rate
Machine setups	112	per setup	=40320/360
Special processing	37	per MH	=281200/7600
General Factory	10	per DLH	=738000/73800
2
	Rims	Posts
Machine setups	21280	19040
Special processing	281200	0
General Factory	228000	510000
Total overhead	530480	529040
Divide by units	38000	170000
Overhead per unit	13.96	3.11
	Rims	Posts
Direct materials	15.00	8.00
Direct labour	9.60	4.80
Overhead per unit	13.96	3.11
Unit cost	38.56	15.91

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Answer 2

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