A. Calculate total cost and the average cost per unit if the overhead is based on the direct labor cost. Show information as Job cost sheet.

B. Which overhead cost allocation method would you recommend to the controller?

  

Larabee Company produces two types of product, flat and round, on the same production line. For the current period, the company reports the following data. Direct materials Direct labor Overhead (250 % of direct labor cost) Total cost Units produced Average cost per unit Overhead Cost Category (Activity Cost Pool) Flat $12,000 6,000 15.000 $33,000 Supervision Depreciation of machinery Assembly line preparation 10,000 $3.30 Round Driver Direct labor cost ($) Machine hours Setups (number) $24,000 18,000 45.000 $87,000 Larabee s controller wishes to apply activity-based costing (ABC) to allocate the $60,000 of overhead costs incurred by the two product lines to see whether cost per unit would change markedly from that reported above. She has collected the following information. 15,000 $5.80 Total $36.000 24,000 60,000 $120,000 Flat Usage Round $6.000 $18,000 400 hours 500 hours 40 times 80 times Total $24,000 900 hours 120 times tatalo sie raubing orb ganovilab bus grillse gnnote miw botsiooses 21200 VIL Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation She has collected the following information about the cost driver for each category (cost pool) and the amount of each driver used by the two product lines. Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Instructions Driver Direct labor cost ($) Machine hours Setups (number) Flat Cost $12,600 30,600 16,800 $6,000 400 hours 40 times Usage Round $18,000 500 hours 80 times Total $24,000 900 hours 120 times