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Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The

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Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relative costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $301,600. During that time, the company produced 13,100 units of the M-008 and 2,300 units of the M-123. The direct costs of production were as follows M-123 $ 104,800 $ 92,000 46,000 M-008 Total $196,800 Direct materials Direct labor 104,800 150,800 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows Activity Level Costs M-008 M-123 Total S 115,600 1000 9,000 10,000 Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead 90,000 96,000 $ 301,600 20 20 20 30 40 50

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