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BrightTech Industries manufactures two products: EcoLamp and PowerLight. PowerLight is a relatively new product, developed to enter a market closely related to that of EcoLamp. PowerLight is more complex, requiring one hour of direct labor per unit, while EcoLamp requires only $$ or $0\mathrm{.}25$ of an hour. PowerLight is produced on an automated production line.

Currently, the company allocates overhead based on direct labor hours. For the current year, the company estimates $$620,900$ in manufacturing overhead costs and plans to produce $8,260$ units of PowerLight and $53,830$ units of EcoLamp. The unit costs for materials and direct labor are as follows:

EcoLamp

PowerLight

Direct material

$$8$

$$18$

Direct labor

$$12$

$$9$

$$

Required:

$1.$ Calculate the predetermined overhead rate using the current allocation method and determine the unit product cost for each product for the current year.

$2.$ BrightTech is thinking about using activity based costing to allocate overhead and they divide overhead costs among four main activities. The estimated overhead costs and expected activity levels for the current year are as follows:

Activity Cost Pools

Estimated Overhead Costs

EcoLamp

Expected Activity

PowerLight

Total

Machine setups required

$$198,000$

$500$

$1,000$

$1,500$

Purchase orders issued

$$61,600$

$600$

$200$

$800$

Machine$-$hours required

$$172,500$

$2,500$

$9,000$

$11,500$

Maintenance requests issued

$$188,800$

$660$

$940$

$1,600$

Total

$$620,900$

$$

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