Direct
Labor-Hours per Unit Annual
Production
Rims 0.80 13,000 units
Posts 0.40 42,000 units
Additional information about the company follows:
a. Rims require $20 in direct materials per unit, and Posts require $18.
b. The direct labor wage rate is $15 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:
Estimated Activity
Activity Cost Pool (and activity measure) Overhead Cost Rims Posts Total
Machine setups (number of setups) $ 27,720 110 88 198
Special processing (machine-hours) $ 157,500 4,500 0 4,500
General factory (direct labor-hours) $ 272,000 10,400 16,800 27,200
Required:
1. Compute the activity rate for each activity cost pool.
