Question

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

	Basic			Dominator			Total
Units produced		1,500			250			1,750
Machine-hours		3,000			2,000			5,000
Direct labor-hours		4,000			3,000			7,000
Direct materials costs	$	10,000		$	3,500		$	13,500
Direct labor costs		65,000			31,000			96,000
Manufacturing overhead costs								164,064
Total costs							$	273,564

Required:

Compute the individual product costs per unit assuming that Tiger Furnishings uses machine-hours to allocate overhead to the products. (Do not round intermediate calculations. Round final answers to 2 decimal places.)

Basic

Dominator

Answer 1

				Basic		Dominator
Cost per unit				$              115.63		$              400.50
Working:
a.	Overhead recovery rate			=	Total Overhead costs/Total Machine hours
				=	$               1,64,064.00	/	5,000
				=	$                       32.8128
b.	Overhead allocation to each product:
				Basic		Dominator
	Machine hours			3,000		2,000
	Overhead recovery rate			$            32.8128		$            32.8128
	Allocated Overhead			$        98,438.40		$        65,625.60
c.	Cost per unit of each product:
				Basic		Dominator
	Direct Material costs			$        10,000.00		$           3,500.00
	Direct Labor costs			$        65,000.00		$        31,000.00
	Manufacturing Overhead costs			$        98,438.40		$        65,625.60
	Total Costs			$     1,73,438.40		$     1,00,125.60
	÷ Total Units produced			1,500		250
	Cost per unit			$              115.63		$              400.50