Question

Perdon Corporation manufactures safes—large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead.

		Mobile Safes		Walk-in Safes
Units planned for production		190		40
Material moves per product line		290		190
Purchase orders per product line		440		340
Direct labor hours per product line		790		1,690

(a)

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The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25.)

(1)		One mobile safe		$	per unit
(2)		One walk-in safe		$	per unit

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer Statement for calculation of manufacturing overheads per unit 4 Particular Mobile safes Walk in safes Direct labour hours 5 790 1690 Manufacturing overheads allocated 6 based on direct labour hours 177177,42 82822.58 7 No. of units 190 40 8 Manufacturing overhead per unit 435.91 4429.44 10 11 Thus the correct answer is 12 One mobile safe 435.91 4429.44 13 One walk in safe 14