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EXERCISE 4-8 COMPUTING ABC PRODUCT COSTS Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Additional information about the company follows: 2. 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: Required: 1. Compute the activity rate for each activity cost pool. 2. Determine the unit product cost of each product according to the ABC system. \begin{tabular}{|c|c|c|c|c|c|} \hline B & c & D & E & F & G \\ \hline Activity & Estimated OH Cost & Uses & Rates =(Es & st cost/uses) & \\ \hline Machine Setups & 21,600 & 180 & 120 & =C2/D2 & \\ \hline Special Processing & 180,000 & 4,000 & 45 & =C3/D3 & \\ \hline General Factory & 288,000 & 24,000 & 12 & =C4/D4 & \\ \hline & & & & & \\ \hline \multicolumn{2}{|l|}{ Particulars } & Rim & Post & Rims & Posts \\ \hline Direct Materials & & & & 17 & 10 \\ \hline Direct Labor & (160.40)(160.20) & & & 6.4 & 3.2 \\ \hline \multicolumn{6}{|l|}{ Manufacturing Overhead: } \\ \hline Machine Setups & (rate*uses) & 12000 & 9600 & =120100 & =12080 \\ \hline Special Processing & & 180000 & 0 & =454000 & =450 \\ \hline General Factory & & 96000 & 192000 & =128000 & =1216000 \\ \hline Total Manufacturing Overhead & & 288000 & 201600 & =SUM(D10:D12)= & = SUM(E10:E12) \\ \hline Unit Produced & & 20000 & 80000 & & \\ \hline Manufacturing OH per unit & & 14.4 & 2.52 & =D13/D14 & =E13/E14 \\ \hline \multirow[t]{2}{*}{ Unit Product Cost } & & & & 37.8 & 15.72 \\ \hline & & & & =D15+F7+F8 & =E15+G8+G7 \\ \hline \end{tabular} Calculate the activity rate for machine setups in E4-8. QUESTION 2 Which activity suggests that the use of an ABC system is appropriate for the company in E48 ? A. Machine setups B. Special processing C. General factory QUESTION 3 Calculate the labor cost per unit for Rims in E4-8. Calculate the cost per unit for Posts in E4-8

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