Forever Green Co. manufactures artificial Christmas trees. In 2004, Forever Green only pro- duced one type of tree, the Merry Green Tree. However, in 2005 Forever Green introduced a new, top-of-the-line product, the Green As Can Be Tree. The two products require different materials and are manufactured in separate batches. Overhead is allocated on the basis of ma- chine hours. The information from 2005 is as follows:

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A. For each product, what is the cost per unit using process costing?
B. For each product, what is the cost per unit using job-order costing?
C. Which costing method is more accurate for this example? Explain.
D. Assume Forever Green decides to use process costing to calculate unit cost. If Forever Green prices its trees at a \(30 \%\) markup on cost, what would be the unit price for the trees? Is this a good pricing strategy or is one product being overcharged and the other being undercharged?

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Units produced Materials cost Direct labor cost Machine hours Overhead Total Merry Green Green As Can Be 110,000 $4,800,000 100,000 10,000 $4,000,000 $800,000 $9,900,000 $9,000,000 $900,000 130,000 100,000 30,000 $1,000,000