Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 43,000 units next year and Product L is expected to sell 8,600 units. A unit of either product requires 0.5 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $2,193,000. Required: 1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product? 1-b. Compute the total amount of overhead cost that would be applied to each product. 2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level cost. The total manufacturing overhead would be divided in half between the two products, with $1,096,500 assigned to Product H and $1,096,500 assigned to Product L. If this suggestion is followed, how much overhead cost per unit would be assigned to each product?
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 43,000 units next year and Product L is expected to sell 8,600 units. A unit of either product requires 0.5 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $2,193,000. Required: 1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product? 1-b. Compute the total amount of overhead cost that would be applied to each product. 2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level cost. The total manufacturing overhead would be divided in half between the two products, with $1,096,500 assigned to Product H and $1,096,500 assigned to Product L. If this suggestion is followed, how much overhead cost per unit would be assigned to each product?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 4-4 (Algo) Contrast ABC and Conventional Product Costs [LO4-4]
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 43,000 units next
year and Product L is expected to sell 8,600 units. A unit of either product requires 0.5 direct labor-hours.
The company's total manufacturing overhead for the year is expected to be $2,193,000.
Required:
1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method
is followed, how much overhead cost per unit would be applied to each product?
1-b. Compute the total amount of overhead cost that would be applied to each product.
2. Management is considering an activity-based costing system and would like to know what impact this change might have on
product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level
cost. The total manufacturing overhead would be divided in half between the two products, with $1,096,500 assigned to Product H
and $1,096,500 assigned to Product L.
If this suggestion is followed, how much overhead cost per unit would be assigned to each product?
Complete this question by entering your answers in the tabs below.
Reg 1A
Req 18
The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this
method is followed, how much overhead cost per unit would be applied to each product? (Round your answers to 2 decimal
places.)
Overhead cost per unit
Req 2
Product H
Product L](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4d5cfa71-8808-4515-8e7e-1611277710bd%2F12a4b4d6-7b75-4ca3-acb8-5ab84f0a6dea%2F2pz1z9r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 4-4 (Algo) Contrast ABC and Conventional Product Costs [LO4-4]
Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 43,000 units next
year and Product L is expected to sell 8,600 units. A unit of either product requires 0.5 direct labor-hours.
The company's total manufacturing overhead for the year is expected to be $2,193,000.
Required:
1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method
is followed, how much overhead cost per unit would be applied to each product?
1-b. Compute the total amount of overhead cost that would be applied to each product.
2. Management is considering an activity-based costing system and would like to know what impact this change might have on
product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level
cost. The total manufacturing overhead would be divided in half between the two products, with $1,096,500 assigned to Product H
and $1,096,500 assigned to Product L.
If this suggestion is followed, how much overhead cost per unit would be assigned to each product?
Complete this question by entering your answers in the tabs below.
Reg 1A
Req 18
The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this
method is followed, how much overhead cost per unit would be applied to each product? (Round your answers to 2 decimal
places.)
Overhead cost per unit
Req 2
Product H
Product L
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req 1A
Req 18
Compute the total amount of overhead cost that would be applied to each product.
Product L
Total overhead cost
Req 2
Overhead cost per unit
Product H
<Roq 1A
Product H
Management is considering an activity-based costing system and would like to know what impact this change might have on
product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a
product-level cost. The total manufacturing overhead would be divided in half between the two products, with $1,096,500
assigned to Product H and $1,096,500 assigned to Product L.
If this suggestion is followed, how much overhead cost per unit would be assigned to each product? (Round your answers to 2
decimal places.)
Product L
Total
< Req 18
Req 2 >
Raq 2 >
Show less A
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