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		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:

Answer 1

				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