A company produces two similar products, Low-Price-Point (LPP) and Upper-Price-Point (UPP). The total indirect cost to be allocated to the two products is $35,000 You are asked to determine the net revenue the company can expect from the sale of each product, given the instructions and data below:

(a) Use direct-labor costs to allocate the overhead, and

(b) Use material cost to allocate the overhead

(c) If these are different, why are they different, and what effect does this have on the company?

Data Item LPP UPP Direct labor costs $50,000 $65.000 Material costs $35,000 $47.500 Selling price $60 $95 Annual units produced 1800 1400