Question

Cabigas Company manufactures two products, Product C and Product D. The company estimated it would incur $186,330 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below:

	Product C			Product D
Estimated volume		2,000	units			2,700	units
Direct labor-hours per unit		5.25	hours			2.10	hour
Direct materials cost per unit	$	24.75			$	27.30
Direct labor cost per unit	$	37.00			$	12.20

Requried:
a-1.	Compute the predetermined overhead rate under the current method. (Round your answer to 2 decimal places.)

Predetermined overhead rate

$   per DLH

a-2.	Determine the unit product cost of each product for the current year. (Do not round your intermediate calculations. Round your final answer to 2 decimal places.)

	Product C	Product D
Unit product cost	$	$

Answer 1

1)

Manufacturing overhead cost during the period = 186330

Total direct labor hours = Direct labor hours required in Product C + Direct labor hours required in Product D

= 2000*5.25 + 2700*2.10 = 10500 hours + 5670 hours = 16170 hours

Predetermined overhead rate = Manufacturing overhead cost during the period /Total direct labor hours

= 186330/16170 = 11.52

Predetermined overhead rate = $11.52 per DLH

2)

Calculation of unit product cost of each product for the current year: (Amount in $)

Particulars	Product C	Product D
Direct materials cost per unit (A)	24.75	27.30
Direct labor cost per unit (B)	37.00	12.20
Overhead cost per unit (Predetermined overhead rate* Direct labor-hours per unit) (C)	60.48 (11.52*5.25)	24.19 (11.52*2.10)
Unit Product cost (A+B+C)	122.23	63.69