Question

In: Accounting

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator....

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 4,000 2,000 6,000
Direct labor-hours 2,000 1,000 3,000
Direct materials costs $ 10,000 $ 4,000 $ 14,000
Direct labor costs 64,000 40,000 104,000
Manufacturing overhead costs 182,520
Total costs $ 300,520


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 unit cost:

Dominatior unit cost:

Solutions

Expert Solution

Basic Dominator
Cost per unit $              130.45 $              419.36
Working:
a. Overhead recovery rate = Total Overhead costs/Total Machine hours
= $                     1,82,520 /         6,000
= $                           30.42
b. Overhead allocation to each product:
Basic Dominator
Machine hours                     4,000                     2,000
Overhead recovery rate $                 30.42 $                 30.42
Allocated Overhead $           1,21,680 $              60,840
c. Cost per unit of each product:
Basic Dominator
Direct Material costs $              10,000 $                 4,000
Direct Labor costs $              64,000 $              40,000
Manufacturing Overhead costs $           1,21,680 $              60,840
Total Costs $           1,95,680 $           1,04,840
÷ Total Units produced                     1,500                         250
Cost per unit $              130.45 $              419.36

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