60.1K

Verified Solution

Link Copied!

Sandstorm Manufacturing Inc. makes two types of industrial component partsthe LE100 and the UL600. It annually produces 65,000 units of LE100 and 13,000 units of UL600.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: LE100 UL600 Total Direct materials Direct labor $ 371,325 $167,550 $538,875 $125,000 $ 45,000 $170,000 The company is considering implementing an activity-based costing system that distributes all of its manufacturing overhead to four activities as shown below: Activity Activity Cost Pool (and Activity Measure) Manufacturing Overhead UL600 Total 248,000 LE100 95,000 Machining (machine-hours) 65,000 160,000 202,500 100 350 450 Setups (setup hours) Product-level (number of products) General factory (direct labor dollars) 88,400 1 1 2 73,100 125,000 $45,000 $170,000 Total manufacturing overhead cost $612,000 Required: 1-a. Compute the plantwide overhead rate that would be used in the company's conventional cost system. (Round your final answer to 2 decimal places.) Predetermined overhead rate per DL$ 1-b. Using the plantwide rate, compute the unit product cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) LE100 UL600 Unit product cost 2-a. Compute the activity rate for each activity cost pool. (Round your Machining and General factory activity rates to 2 decimal places.) Activity Rate per MH Activity Cost Pools Machining Setups Product-level General factory per setup hr. per product per DLS 2-b. Using the activity rates, compute the unit product cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) LE100 UL600 Unit product cost

Answer & Explanation Solved by verified expert

See Answer