Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 48,000 units next year and Product L is expected to sell 9,600 units. A unit of either product requires 0.7 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $3,427,200. 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 $1,713,600 assigned to Product H and $1,713,600 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 48,000 units next year and Product L is expected to sell 9,600 units. A unit of either product requires 0.7 direct labor-hours. The company's total manufacturing overhead for the year is expected to be $3,427,200. 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 $1,713,600 assigned to Product H and $1,713,600 assigned to Product L. If this suggestion is followed, how much overhead cost per unit would be assigned to each product?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...
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![Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected
to sell 48,000 units next year and Product L is expected to sell 9,600 units. A unit of either product requires 0.7
direct labor-hours.
The company's total manufacturing overhead for the year is expected to be $3,427,200.
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 $1,713,600 assigned to Product H and $1,713,600 assigned to
Product L.
If this suggestion is followed, how much overhead cost per unit would be assigned to each product?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1f5f35a5-6214-459c-90d2-e26e8084ab69%2F7d3db991-4bd6-4937-abe9-09ebb6bd079c%2Frhqis7v_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected
to sell 48,000 units next year and Product L is expected to sell 9,600 units. A unit of either product requires 0.7
direct labor-hours.
The company's total manufacturing overhead for the year is expected to be $3,427,200.
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 $1,713,600 assigned to Product H and $1,713,600 assigned to
Product L.
If this suggestion is followed, how much overhead cost per unit would be assigned to each product?
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