Maple Woods Inc. manufactures lounge chairs available in both a luxury and a standard model. The...
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Maple Woods Inc. manufactures lounge chairs available in both a luxury and a standard model. The company has made the standard model for years; the luxury model was introduced several years ago to capture a new segment of the market. Since the introduction of the luxury model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the luxury model have been increasing rapidly. Overhead is applied to products on the basis of direct labour hours. At the beginning of the current year, management estimated that $5,113,492 in overhead costs would be incurred and the company would produce and sell 5,100 units of the luxury model and 40,360 units of the standard model. The luxury model requires 3.0 hours of direct labour time per unit, and the standard model requires 2.0 hours. Materials and labour costs follow: Direct materials cost per unit Direct labour cost per hour Luxury $162 16 Standard $122 19 Required: 1. Compute the predetermined overhead rate using direct labour hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Predetermined overhead rate Unit product cost of Luxury Unit product cost of Standard per DLH Maple Woods Inc. manufactures lounge chairs available in both a luxury and a standard model. The company has made the standard model for years; the luxury model was introduced several years ago to capture a new segment of the market. Since the introduction of the luxury model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the luxury model have been increasing rapidly. Overhead is applied to products on the basis of direct labour hours. At the beginning of the current year, management estimated that $5,113,492 in overhead costs would be incurred and the company would produce and sell 5,100 units of the luxury model and 40,360 units of the standard model. The luxury model requires 3.0 hours of direct labour time per unit, and the standard model requires 2.0 hours. Materials and labour costs follow: Direct materials cost per unit Direct labour cost per hour Luxury $162 16 Standard $122 19 Required: 1. Compute the predetermined overhead rate using direct labour hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Predetermined overhead rate Unit product cost of Luxury Unit product cost of Standard per DLH
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Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
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