Applied Overhead and Unit Overhead Cost: Plantwide Rates

Seco, Inc., produces two types of clothes dryers: deluxe and regular. Seco 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	$1,824,000
Expected activity	57,000
Actual activity (direct labor hours):
Deluxe dryer	13,000
Regular dryer	44,000
Units produced:
Deluxe dryer	26,000
Regular dryer	220,000

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
Deluxe	$fill in the blank 2
Regular	$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
Deluxe	$fill in the blank 4 per unit
Regular	$fill in the blank 5 per unit

3. What if the deluxe product used 26,000 hours (to produce 26,000 units) instead of 13,000 hours (total expected hours remain the same)? Calculate the effect on the profitability of this product line if all 26,000 units are sold.

Profits would

decreaseincreasedecrease

by $fill in the blank 7