Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountant headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $315,200. During that time, the company produced 13.200 units of the M-008 and 2,500 units of the M-123. The direct costs of pr were as follows: Direct materials Direct labor M-008 M-123 $105,000 $104.000 105,600 52.000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows: Activity Level Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Total overhead Total unit cost $ Total overhead Total unit cost M-006 Costs $141,700 22.20 M-008 Total $209,600 157,600 80,000 93,500 $315,200 M-008 1,000 20 10 M-123 9.000 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? (Round your intermediate calculations and final answers to 2 decimal places.) M-123 20 40 Total 10,000 40 50 b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? (Round "Total unit cost" to 2 decimal places.) M-123
Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountant headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $315,200. During that time, the company produced 13.200 units of the M-008 and 2,500 units of the M-123. The direct costs of pr were as follows: Direct materials Direct labor M-008 M-123 $105,000 $104.000 105,600 52.000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows: Activity Level Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Total overhead Total unit cost $ Total overhead Total unit cost M-006 Costs $141,700 22.20 M-008 Total $209,600 157,600 80,000 93,500 $315,200 M-008 1,000 20 10 M-123 9.000 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? (Round your intermediate calculations and final answers to 2 decimal places.) M-123 20 40 Total 10,000 40 50 b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? (Round "Total unit cost" to 2 decimal places.) M-123
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at com
headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to
headquarters.
Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $315,200. During that time, the company produced 13,200 units of the M-006 and 2,600 units of the M-123. The direct costs of production
were as follows:
Direct materials
Direct labor
M-008
$105.000
105,600
Cost Driver
Number of machine-hours
Number of production runs
Number of inspections
Total overhead
Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows:
Activity Level
Total overhead
Total unit costs
$
Total overhead
Total unit cost
M-123
$104,000
52,000
M-008
22.20
Costs
$141,700
80,000
93,500
$315,200
tal
Total
$ 209,600
157,600
Required:
a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? (Round your intermediate calculations and final answers to 2 decimal places.)
M-008
1,000
M-008 M-123
20
10
M-123
M-123 Total
9.000 10,000
20 40
40
50
b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? (Round "Total unit cost" to 2 decimal places.)
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