Ellix Company manufactures two models of ultra-high fidelity speakers, the X 200 model and the X 99 model. Data regarding the two products follow:
Additional information about the company follows: (i) Model X 200 requires 72 in direct materials per unit, and model X 99 requires 50. (ii) The direct labor wage rate is 10 per hour. (iii) The company has always used direct labor-hours as the base for applying manufacturing overhead cost to products. (iv) Model X200 is more complex to manufacture than model X99 and requires the use of special equipment. Consequently, the company is considering the use of activity-based costing to apply manufacturing overhead cost to products. Three activity cost pools have been identified as follows:
(b) Assume that the company decides to use activity-based costing to apply manufacturing overhead cost to products. (i) Compute the predetermined overhead rate for each activity cost pool and determine the amount of overhead cost that would be applied to each model using the activity-based costing system. (ii) Compute the unit product cost of each model.

it's far generally expressed as the mixture of all fixed charges (e.g., the expenses of a building lease and of heavy machinery), which do now not exchange with the quantity of output produced, and all variable costs (e.g., the costs of labour and of raw materials), which do exchange with the extent of output.

If fixed costs are not altered (e.g., with the aid of acquiring a larger building or by way of obtaining greater heavy machinery),

the rate of increase of variable costs with growing output can be gradually extra ultimately,

due to diminishing returns on extra gadgets of output. In other phrases, ultimately, gradually fewer units of output might be yielded by additional inputs of variable costs.

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