Direct Materials $600 $320 Direct Labor ($20 per hour) $100 $80 Units Produced 20,000 10,000 Overhead, totalling $4,900,000, is currently allocated on the basis of direct labor hours. Management aims to have a 30% gross profit margin on each of its products, and is concerned about the profitability of the Fancy model. Otis' controller accumulated the following information about overhead for the year: Overhead Item Cost Cost Driver Purchasing $1,380,000 Number of purchase orders Machining $3,100,000 Number of machine hours Quality control $420,000 Number of direct labor hours Cost Driver Fancy Not-So-Fancy. Total Purchase orders 21,620 24,380 46,000 Machine hours 40,000 60,000 100,000 Direct labor hours 100,000 40,000 140,000 ) Calculate the Overhead Rates using the ABC system. ) Determine the cost per unit for each model using ABC. Essay Toolbar navigation