Question

u Uli e scenario of Zany Brainy: Zany Brainy Corp. manufactures two types of lamps, Home size and Industry size lamps. Company produces 10,000 Home size lamps and 2,000 Industry size lamps. Following is the data provided about these two products: Total Home size Industry size lamp lamp $10 $15 $16.00 I $16.00 0.50 0.7 Direct materials per unit Direct manufacturing labour rate per unit Direct labour hours per unit Set up costs Lamps produced per patch Set up hour per patch Advertising costs $110,000 200 50 1 3 $150,000

Answer 1

	home size lamp	industry size lamp
direct material cost per unit	$10	$15
direct labour cost per unit	$16	$16
manufacturing overhead per unit	$40.625	$40.625
total unit price	$66.625	$71.625

manufacturing overhead per unit=budgeted overheads/budgeted activity level

budgeted overheads=setup costs+advertising costs

budgeted overheads=$110000+$150000=$260000

budgeted activity level is based on the direct labour hours.

budgeted activity level=direct labour hours per unit*number of units produced.

budgeted activity level for

home size lamps=0.5*10000=5000 hours

industry size lamps=0.7*2000=1400 hours

total=5000+1400=6400 hours

manufacturing overhead per unit =$260000/6400=$40.625