Baird Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour. Baird expects to incur $280,000 of overhead cost during the next fiscal year. Other budget information follows:

		Vogue		Beauty		Glamour		Total
Direct labor hours		2,200		4,200		7,600		14,000
Machine hours		1,300		1,400		1,300		4,000

Required

1. Use direct labor hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.

2. Use machine hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product.

Question 2

Finch Chemical Company makes three products, B7, K6, and X9, which are joint products from the same materials. In a standard batch of 336,700 pounds of raw materials, the company generates 72,000 pounds of B7, 166,800 pounds of K6, and 97,900 pounds of X9. A standard batch costs $3,367,000 to produce. The sales prices per pound are $10, $15, and $20 for B7, K6, and X9, respectively.

Required

1. Allocate the joint product cost among the three final products using weight as the allocation base.

2. Allocate the joint product cost among the three final products using market value as the allocation base

Question 3

Thornton Corporation expects to incur indirect overhead costs of $68,400 per month and direct manufacturing costs of $15 per unit. The expected production activity for the first four months of 2017 is as follows:

	January		February		March		April
Estimated production in units	4,700		7,300		4,300		6,500

Required

1. Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year.

2. Allocate overhead costs to each month using the overhead rate computed in Requirement a.

3. Calculate the total cost per unit for each month using the overhead allocated in Requirement b.