Question

Some company produces two products, A and B with most of the production being accomplished by machine. Data on operations and costs for October follow:

	Product A			Product B			Total
Units produced		9,000			4,600			13,600
Machine-hours used		970			820			1,790
Direct labor-hours		210			120			330
Direct materials costs	$	12,100		$	7,200		$	19,300
Direct labor costs	$	4,200		$	2,400		$	6,600
Manufacturing overhead costs							$	22,423

Management asks the firm's cost accountant to compute product costs. The accountant first assigns overhead costs to two pools: overhead related to direct materials and overhead related to machine-hours. The analysis of overhead accounts by the cost accountant follows:

Account	Amount			Related to:
Utilities	$	3,920		Machine-hours
Supplies		2,800		Materials
Machine depreciation and maintenance		9,476		Machine-hours
Purchasing and storing materials		2,797		Materials
Miscellaneous		3,430		Machine-hours

Required:

(a)

Compute the predetermined overhead rates assuming that the company uses machine-hours to allocate machine-related overhead costs and materials costs to allocate materials-related overhead costs.(Round your machine-related overhead rate to 2 decimal places. Omit the "$" and "%" signs in your response.)

	Overhead rate
Machine related	$	per hour
Materials related		%

(b)	Compute the total costs of production and the cost per unit for each of the two products for October. (Do not round intermediate calculations. Round your cost per unit to 2 decimal places. Omit the "$" sign in your response.)

	Product A	Product B
Total cost	$	$
Cost per unit	$	$

Answer 1

a
Machine-related Overhead	$            9.40
Material related Overhead	29%

Account	Amount
Utilities	$          3,920
Machine depreciation and maintenance	$          9,476
Miscellaneous	$          3,430
Total Cost - Machine Related	$        16,826
Machine-hours used	1,790
Machine related Overhead	$            9.40

Account	Amount
Supplies	$          2,800
Purchasing and storing materials	$          2,797
Total Cost - Material Related	$          5,597
Total Direct materials costs	19,300
Material related Overhead	29%

b)

Total Cost	28,927	19,396
Cost per Unit	3.21	4.22

	Product A	Product B
Direct materials costs	$        12,100	$          7,200
Direct labor costs	$          4,200	$          2,400
Manufacturing overhead costs
Machine related Overhead (970*9.40)(820*9.40)	$          9,118	$          7,708
Material related Overhead (12100*19%)(7200*29%)	$          3,509	$          2,088
Total cost	$        28,927	$        19,396
Units produced	$          9,000	$          4,600
Cost per Unit	$            3.21	$            4.22

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