Question

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:
 

	Basic			Dominator			Total
Units produced		1,140			330			1,470
Machine-hours		3,400			3,600			7,000
Direct labor-hours		2,000			2,000			4,000
Direct materials costs	$	13,000		$	4,750		$	17,750
Direct labor costs		62,500			52,500			115,000
Manufacturing overhead costs								202,970
Total costs							$	335,720

 
Tiger Furnishings’s CFO believes that a two-stage cost allocation system would give managers better cost information. She asks the company’s cost accountant to analyze the accounts and assign overhead costs to two pools: overhead related to direct labor cost and overhead related to machine-hours.

 

The analysis of overhead accounts by the cost accountant follows:

 

Manufacturing Overhead	Overhead Estimate		Cost Pool Assignment
Utilities	$	1,600	Machine-hour related
Supplies		4,100	Direct labor cost related
Training		8,200	Direct labor cost related
Supervision		25,800	Direct labor cost related
Machine depreciation		27,000	Machine-hour related
Plant depreciation		27,400	Machine-hour related
Miscellaneous		108,870	Direct labor cost related

Required:

b. Compute the product costs per unit assuming that Tiger Furnishings uses direct labor costs and machine-hours to allocate overhead to the products. (Do not round intermediate calculations. Round your final answers to the nearest whole number.)

                                                basic                dominator                    total

product costing (blank row)

  direct material

  direct labor

Overhead (blank row)

  machine-related

  labor-related

   total overhead

total cost

units produced

unit cost

Answer 1

step 1) machine total overhead  56,000/7000= 8

           labor total overhead         146,970/115,000= 1.278

Basic product costing

DM= 13,000 from chart 1

DL= 62,500 from chart 1

basic overhead

machine related:  3400*8= 27,200

labor related: 62,500*1.278= 79,875

total overhead 27,200+79,875= 107,075

total cost: 107,025+ 13,000+ 62,500= 182,575

units produced: 1,140 from chart 1

unit cost: 182,575/1,140= 160.1535087719 or 160

dominator product

Dm= 4,750

dL= 52,500 

overhead

machine related 3600*8= 28,800

labor related 52,500*1.278=67,095

total overhead 28,800+67,095= 95,895

total cost: 95,895+4,750+52,500= 153,145

units produced 330

unit cost 153,145/330= 464.0757575758 or 464

total column: basic+ dominator all except units produced and unit cost.