Question

Flawless Cosmetic Company manufactures and distributes several different products. The company currently uses a plantwide allocation method for allocating overhead at a rate of $7 per direct labor hour. Loren is the department manager of the Makeup Department that produces Products – Concealer (C) and Glow Cream (GC). Jennifer is the department manager of the Hair Care Department that manufactures Product – Shampoo (S). The product costs (per case of 24 bottles) and other information are as follows:

	Products
	C				GC				S
Direct materials	$	95.00			$	76.00			$	48.00
Direct labor		44.00				34.50				10.00
Overhead		24.00				19.00				15.00
	$	163.00			$	129.50			$	73.00
Machine hours		5				3				4
Number of cases (per year)		250				450				550

If Flawless changes its allocation basis to machine hours, what is the total product cost per case for Product C?

Answer 1

$162.75 Answes Total ouer head 24 (250)+ 19 (4g0)+ 15(550) = 22800 Total machine hours = 5(250)+ 3C450 )+4( 550) 4000 22800 YQte overhead 4800 4.75 MH: product cost for C 954 44+ 4.75(5) !6 2.75