Question

Product-Costing Accuracy, Plantwide and Departmental Rates, ABC 3,000 Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products: Product-Related Data Scientific Business Units produced per year 75,000 750,000 Prime costs $249,000 $2,490,000 Direct labor hours 99,700 997,000 Machine hours 50,500 505,000 Production runs 100 150 Inspection hours 2,000 Maintenance hours 2,250 9,000 Department Data Department 1 Department 2 Direct labor hours: Scientific calculator 73,500 26,200 Business calculator 139.580 857.420 Total 213,080 883,620 Machine hours: Scientific calculator 24,000 26,500 Business calculator 393.600 11.400 Total 417,600 137.900 Overhead costs: Setup costs $217,500 $217,500 Inspection costs 175,000 175,000 Power 233,000 138,000 Maintenance 219.000 231.000 Total $844,500 $761,500

Answer 1

1. Plantwide rate

Total labour cost
Department1	$            213,080
Department2	$            883,620
.
Total	$        1,096,700
Total Units	$            825,000
Rate	$                   1.33

Overhead cost per unit

Overheads	Department 1	Department 2
Setup	$            217,500	$        217,500
Inspection	$            175,000	$        175,000
Power	$            233,000	$        138,000
Maintenance	$            219,000	$        231,000
Total	$            844,500	$        761,500
Total machine hours	417600	137900
Cost per machine hour	$                   2.02	$               5.52
Total Cost
Scientific	$         48,534.48	$ 146,336.11
Business	$      795,965.52	$ 615,163.89
Total Units	75000	750000
Cost per unit	11.26	1.021

2.

Departmental rates
	Department 1	Department 2
Total Overheads	$            844,500	$        761,500
Total Machine hour	417600	137900
Total labour hours	213080	883620
Rate per machine hour	2.02	5.52
Rate per labour hour	3.96	0.86
Total machiner hours	417600	137900
Scientific	24000	26400
Business	393600	111400
Total Rate
Scientific	$               48,534	$        145,784
Business	$            795,966	$        615,164
Rate per unit
Scientific	0.65	1.94
Business	1.06	0.82

3.