1a predetermined manufacturing overhead rate 40 000 units of mono relay x 75 per uni 526455

1a. predetermined manufacturing overhead rate:

40,000 units of Mono relay x.75 per unit = 30,000

10,000 units of Bi relay x 1.00 per units =10,000

Total direct labor hours required =40,000 hours

Predetermined manufactured overhear rate = $1,000,000 / 40,000 = $25.00 per DLH

1b. Unit product cost of each product:

Mono relayBi-relay

Direct materials$35.00$48.00

Direct labor$9.00$12.00

$25.00 x .75$28.75

$25.00 x 1.00$25.00

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Unit product cost$62.75$85.00

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2. Activity rate: estimated overhead cost / total expected activity= activity rate.

Activity cost poolEst. overhead costExpected activityActivity rate

Maintaining parts

Inventory$180,000225 part types$800 per part type

Processing Purchase

Orders$90,0001.000 orders $90 per order

Quality control $230,0005,750 test$40 per test

Machine related$500,00010,000 MH$50 per MH

3A. Determine total amount of manufacturing overhead cost that would be applied to each product using the activity-based costing system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each product.

Mono –RelayBi- Relay

Expected ActivityAmountExpected activity Amount

Maintinig parts Inv.75$60.000150$120,000

@$800

ProcessingPurchase 800$72,000200$18.000

Orders @$90

Quality Control @2,500$100,0003.250$130,000

$40

Machine related4.000$200.0006.000$300,000

@50

Total manufacturing

Overhead cost $432.000$568,000

Units produced 40,00010,000

Manufacturing Overhead

Per Unit$10.80$56.80

3B.Compute the unit product cost of each product.

Mono-RelayBi-relay

Direct Materials$35 $48

Direct labor$9$12

Manufacturing overhead$10.80$56.80

Unit Product Cost$54.80 $116.80

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4. Identify factors that may account for the company’s declining profits?