Doaktown Products manufactures fishing equlpment 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 company headquarters have prepared costs for the two reels for the most recent perlod. 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 $272,800. During that time, the company produced 11,800 units of the M-008 and 2100 units of the M-123. The direct costs of production were as follows. T-00 -123 Total Direct naterials 594,400 $ 84,000 $178,400 Direct labor 94,400 42,000 136,400 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows Activity Level M-000 M-123 8,000 2,000 Cont Driver Conte $ 30,800 90,000 92,000 Total unber of machine-hours Sunber of produetion runs Sunber of inspections 7otal overhead 10,000 10 30 40 10 40 50 $272,800 Required: a How much overheed 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 eech product? 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?
Doaktown Products manufactures fishing equlpment 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 company headquarters have prepared costs for the two reels for the most recent perlod. 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 $272,800. During that time, the company produced 11,800 units of the M-008 and 2100 units of the M-123. The direct costs of production were as follows. T-00 -123 Total Direct naterials 594,400 $ 84,000 $178,400 Direct labor 94,400 42,000 136,400 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows Activity Level M-000 M-123 8,000 2,000 Cont Driver Conte $ 30,800 90,000 92,000 Total unber of machine-hours Sunber of produetion runs Sunber of inspections 7otal overhead 10,000 10 30 40 10 40 50 $272,800 Required: a How much overheed 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 eech product? 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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?
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?
Transcribed Image Text:Doaktown Products manufactures fishing equlpment for recreational uses. The Miramichi plant produces the company's two verslons
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 company headquarters have prepared costs for the two reels for the most recent perlod. The plant manager is
concerned. The cost report does not coincide with her Intultion 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 $272,800. During that time, the company produced 11,800 units of the M-008 and 2,100 units of the M-123. The direct
costs of production were as follows.
-008
N-123
Total
Direct materials
$94,400 $ 84,000
42,000
$178,400
Direct labor
94,400
136,400
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
Costs
M-008
M-123
Total
$ 90,800
90,000
92,000
Bunber of machine-hours
8,000
2,000 10,00
Sunber of production runs
Bumber of inspections
10
30
40
10
40
50
Total overhead
$272,800
Required:
a. How much overheed 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 eech product?
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?
Complete this question by entering your answers in the tabs below.
Recuired A
Required B
How much overhead will be assigned to each product if these three cost drivers are used to alocate overhead? What is the
total cost per unit produced for each product? (Round "Total unit cost to 2 decimal places.)
M-008
M-123
Total ovarhead
Tota unt cost
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