- Doaktown Products Manufactures Fishing Equipment For Recreational Uses The Miramichi Plant Produces The Company S Two V 1 (261.12 KiB) Viewed 24 times
Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the
company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at
company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $281,600. During that time, the
company produced 11,100 units of the M-008 and 2,600 units of the M-123. The direct costs of production were as follows. M-008 Direct materials $ 88,800 Direct labor 88,800 M-123 $104,000 52,000 Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Costs $110, 100 Total $192,800 140,800 80,000 91,500 $281,600 Activity Level M-008 1,000 10 30 M-123 Total 9,000 10,000 30 40 20 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?
Required A Required B 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? (Round "Total unit cost" to 2 decimal places.) Total overhead Total unit cost M-008 M-123
Required A Required 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? (Round "Total unit cost" to 2 decimal places.) Total overhead Total unit cost M-008 M-123