Chapter $3$ Case

Marble, Inc. manufactures a product that is available in both a flexible and a rigid model. The company has made the rigid model for years; the flexible model was introduced several years ago to tap a new segment of the market. Since introduction of the flexible model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the flexible model have been increasing rapidly.

Overhead is applied to products on the basis of direct labor$-$hours. At the beginning of the current year, management estimated that $$600,000$ in overhead costs would be incurred and the company would produce and sell $1,000$ units of the flexible model and $10,000$ units of the regular model. The flexible model requires $2$ hours of direct labor time per unit, and the regular model requires $1$ hour. Direct materials and labor costs per unit are given below:

Direct materials cost per unit.

$\backslash$table$[[$Flexible$,$Rigid$],[$$$110\mathrm{.}00,$$$80\mathrm{.}00$