hrough two producing departments. Model A's production is much more labor- ntensive than Model B's. Model B is also the more popular of the two speakers. The ollowing data have been gathered for the two products: Product Data Model A Model B Units produced per year 30,000 300,000 Prime costs $2,000,000 $200,000 140,000 Direct labor hours Machine hours Production runs 300,000 20,000 200,000 40 60 Inspection hours Maintenance hours 800 1,200 10,000 90,000 Overhead Costs $ 360,00o Setup costs Inspection costs Machining Maintenance Total 280,000 320,000 360,000 $1,320,000 Required 1. Compute the overhead cost per unit for each product using a plantwide rate based on direct labor hours. 2. Compute the overhead cost per unit for each product using activity-based costing. 3. Suppose that Tamarindo decides to use departmental overhead rates. There are two departments: Department 1 (machine intensive) with a rate of $4.66 per machine hour, and Department 2 (labor intensive) with a rate of $1.20 per direct labor hour. The consumption of these two drivers is given below:

hrough two producing departments. Model A's production is much more labor- ntensive than Model B's. Model B is also the more popular of the two speakers. The ollowing data have been gathered for the two products: Product Data Model A Model B Units produced per year 30,000 300,000 Prime costs $2,000,000 $200,000 140,000 Direct labor hours Machine hours Production runs 300,000 20,000 200,000 40 60 Inspection hours Maintenance hours 800 1,200 10,000 90,000 Overhead Costs $ 360,00o Setup costs Inspection costs Machining Maintenance Total 280,000 320,000 360,000 $1,320,000 Required 1. Compute the overhead cost per unit for each product using a plantwide rate based on direct labor hours. 2. Compute the overhead cost per unit for each product using activity-based costing. 3. Suppose that Tamarindo decides to use departmental overhead rates. There are two departments: Department 1 (machine intensive) with a rate of $4.66 per machine hour, and Department 2 (labor intensive) with a rate of $1.20 per direct labor hour. The consumption of these two drivers is given below:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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