Applied Overhead and Unit Overhead Cost: Plantwide Rates

Imprimo, Inc., produces two types of ink-jet printers: business and home. Imprimo uses a plantwide rate based on direct labor hours to assign its overhead costs. The company has the following estimated and actual data for the coming year:

Estimated overhead	$2,350,000
Expected activity	47,000
Actual activity (direct labor hours):
Business printer	9,000
Home printer	38,000
Units produced:
Business printer	18,000
Home printer	190,000

Required:

1. Calculate the predetermined plantwide overhead rate, using direct labor hours. $fill in the blank 1 per hour

Calculate the applied overhead for each product, using direct labor hours.

	Applied overhead
Business	$fill in the blank 2
Home	$fill in the blank 3

2. Calculate the overhead cost per unit for each product. If required, round your answers to the nearest cent.

	Overhead Cost
Business	$fill in the blank 4 per unit
Home	$fill in the blank 5 per unit

3. What if the business printer used 18,000 hours (to produce 18,000 units) instead of 9,000 hours (total expected hours remain the same)? Calculate the effect on the profitability of this product line if all 18,000 units are sold.

Profits would

decreaseincrease

by $fill in the blank 7