9-4

Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $312,000 During that time, the company produced 14,000 units of the M-008 and 2,200 units of the M-123. The direct costs of production were as follows M-008 M-123 Total Direct materials Direct labor $112,000 $88,000 $ 200,000 44,000 112,000 156,000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows eve Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Costs M-008 M-123 Total $136,000 1000 9,000 10,000 40 60 80,000 96,000 $ 312,000 10 20 30 40 Required a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? (Round your intermediate calculations and final answers to 2 decimal places.) M-008 M-123 Total overhead Total unit cost b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? (Round "Total unit cost" to 2 decimal places.) M-008 M-123 Total overhead Total unit cost