Fisher Flxtures manufactures three types of Ilghting flxtures, with model names of Silver, Gold, and Platinum. It applies

all indirect costs according to an annual predetermined rate based on direct labor$-$hours. The plant controller has

recommended that the company switch to an activity$-$based costing system. The controller's staff prepared the

following cost estimates for next year $($year $2)$ for the recommended cost drivers.

In addition, management estimated $45,000$ direct labor$-$hours for year $2.$

Assume that the following cost$-$driver volumes occurred in January, year $2$ :

Labor costs are based on the contractual rate of $$25$ per hour.

Required:

a$.$ Compute the predetermined rate for year $2$ for use in the current product$-$costing system using direct labor$-$hours as

the allocation base.

b$.$ Compute the per$-$unit production costs for each model for January using direct labor$-$hours as the allocation base

and the predetermined rate computed in requirement $($a$).$

c$.$ Compute the predetermined overhead rate for year $2$ for each cost driver using the estimated costs and estimated

cost driver units prepared by the controller's staff to be used in an ABC system.

d$.$ Compute the per unit production costs for each product for January using the cost dilivers recommended by the

consultant and the predetermined rates computed in requirement $($c$).($Note$.$ Do not assume that total overhead

applied to products in January $w$ We the same for activity$-$based costing as it was for the labor$-$hour$-$based

allocation.$)$

Complete this question by entering your answers in the tabs below.

Compute the predetermined rate for year $2$ for use in the current product$-$costing system

using direct labor$-$hours as the allocation base.

Predetermined rate per direct

labor$-$hour