Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $321,600. During that time, the company produced 14,600 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows. Direct materials Direct labor M-008 M-123 $116,800 $ 88,000 116,800 44,000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Costs $156, 600 Total $204, 800 160, 800 70,000 95,000 $321, 600 Activity Level M-888 8,000 20 30 M-123 Total 2,000 10,000 20 20 40 50 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? 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing
overhead was $321,600. During that time, the company produced 14,600 units of the M-008 and 2,200 units of the M-123. The direct
costs of production were as follows.
Direct materials
Direct labor
M-008
M-123
$116,800 $ 88,000
116,800 44,000
Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as
follows.
Cost Driver
Number of machine-hours
Number of production runs
Number of inspections.
Total overhead
Total
$204,800
160,800
Costs
$156, 600
70,000
95,000
$321,600
Activity Level
M-898
M-123
2,000
8,000
20
30
20
20
Total
10,000
40
50
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?
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.
Transcribed Image Text:Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $321,600. During that time, the company produced 14,600 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows. Direct materials Direct labor M-008 M-123 $116,800 $ 88,000 116,800 44,000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Cost Driver Number of machine-hours Number of production runs Number of inspections. Total overhead Total $204,800 160,800 Costs $156, 600 70,000 95,000 $321,600 Activity Level M-898 M-123 2,000 8,000 20 30 20 20 Total 10,000 40 50 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? 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.
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