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		1,250			150			1,400
Machine-hours		4,000			1,000			5,000
Direct labor-hours		2,000			1,000			3,000
Direct materials costs	$	9,000		$	4,250		$	13,250
Direct labor costs		64,000			37,000			101,000
Manufacturing overhead costs								174,225
Total costs							$	288,475

Required:

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

Basic=

Dominator=

Answer 1

Answer. Individual product cost per unit means predetermined overhead rate.

Predetermined overhead on the basis of direct labor cost is used as to allocate overhead is

=Total overhead rate/ Direct labor cost

= $174225/101000

= $1.725

For $64000 labor cost overhead allocated is $64000×1.725

=$110400

Therefore per unit cost = $110400/1250units = Individual product cost per unit =$88.32/unit

For $37000 labor cost overhead allocated is $37000×1.725

= $63, 825

Therefore per unit cost =$63, 825/150units

Individual product cost per unit= $425.5/unit