Question
Blalock Company manufactures and distributes several different products. The company currently uses a plantwide allocation method for allocating overhead at a rate of $10 per
Blalock Company manufactures and distributes several different products. The company currently uses a plantwide allocation method for allocating overhead at a rate of $10 per direct labor hour. Department A produces Products #101X and #102Y. Department A has $262,000 in traceable overhead. Department B manufacturers Product #103Z. Department B has $128,000 in traceable overhead. The product cost (per unit) and other information are as follows:
Products
| 101X | 102Y | 103Z | |
| Direct Materials | $60.00 | $58.00 | $46.00 |
| Direct Labor | 42.00 | 31.50 | 12.00 |
| Overhead | 40.00 | 30.00 | 20.00 |
| $142.00 | $119.50 | $78.00 | |
| Machine hours (per unit) | 4 | 2 | 3 |
| Number of cases (per year) | 3,000 | 5,000 | 6,000 |
Required:
a. If Blalock changes its allocation basis to machine hours, what is the total product cost per unit for Product 101X, 102Y, and 103Z?
b. If Blalock changes its overhead allocation to departmental rates, what are the product costs per unit for Product 101X, 102Y, and103Z, assuming Departments A and B use direct labor hours and machine hours as their respective alloction bases?
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Bank Management Text And Cases
Authors: George H. Hempel, Alan B. Coleman, Donald G. Simonson
3rd Edition
0471621781, 978-0471621782
