Question

LLAVOROILS Harrison Company makes two products and uses a conventional costing system in which a single plantwide, predetermined overhead rate is computed based on direct labour-hours. Data for the two products for the upcoming year follow Rascon $ 29 60 $ 14.70 70 29,000 Parcel $ 23.00 4.20 Direct materials cost per unit Direct labour cost per unit Direct labour-hours per unit Number of units produced 120,000 These products are customized to some degree for specific customers. Required: 1. The company's manufacturing overhead costs for the year are expected to be $861,000. Using the company's traditional costing system, compute the unit product costs for the two products (Round intermediate calculations and round your final answers to 2 decimal places.) Rascon Parcel Unit product DOSI

Answer 1

Rascon $38.43 Parcel $ 28.04 Unit product Cost Working Notes: Total Direct Labor hours = 29,000*0.70 + 120,000*0.40 = 68,300 Overhead Rate = Overhead Cost/total direct labor hours = $861,000/68,300 = $12.61 Unit Product Cost = Materials Cost per unit + Overhead Cost per unit Rascon Unit product cost = $29.60+$12.61*.70 = $38.43 Parcel Unit product Cost = $23 + $12.61*.40 = $28.04