Siegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that $2,041,000 in overhead costs would be incurred and the company would produce and sell 5,000 units of the deluxe model and 32,000 units of the regular model. The deluxe model requires 2.5 hours of direct labour time per unit, and the regular model requires 1.2 hours. Materials and labour costs follow: Direct materials cost per unit Direct labour cost per hour Deluxe $125 Regular $85 20 12 Required: 1. Compute the predetermined overhead rate using direct labour-hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Predetermined overhead rate per DLH Unit product cost of Deluxe Unit product cost of Regular
Siegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that $2,041,000 in overhead costs would be incurred and the company would produce and sell 5,000 units of the deluxe model and 32,000 units of the regular model. The deluxe model requires 2.5 hours of direct labour time per unit, and the regular model requires 1.2 hours. Materials and labour costs follow: Direct materials cost per unit Direct labour cost per hour Deluxe $125 Regular $85 20 12 Required: 1. Compute the predetermined overhead rate using direct labour-hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Predetermined overhead rate per DLH Unit product cost of Deluxe Unit product cost of Regular
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Siegel Corporation manufactures a product avaílable in both a deluxe and a regular model. The company has made the regular model
for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the
deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its
costing system. Sales of the deluxe model have been increasing rapidly.
Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that
$2,041,000 in overhead costs would be incurred and the company would produce and sell 5,000 units of the deluxe model and
32,000 units of the regular model. The deluxe model requires 2.5 hours of direct labour time per unit, and the regular model requires
1.2 hours. Materials and labour costs follow:
Deluxe
Regular
$85
Direct materials cost per unit
$125
Direct labour
ost per hour
20
12
Required:
1. Compute the predetermined overhead rate using direct labour-hours as the basis for allocating overhead costs to products.
Compute the unit product cost for one unit of each model. (Do not round intermediate calculations. Round your answers to 2
decimal places.)
Predetermined overhead rate
per DLH
Unit product cost of Deluxe
Unit product cost of Regular
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