Dugout, Co$.$ makes two kinds of cedar dugouts: the single model is rated for one person, and the double model is rated for two people. The process is mostly done by hand. The machines used are saws and sanders that are not automated. Indirect costs $($manufacturing overhead$)$ are mostly supervisor salaries and some depreciation and rent.

For the month of March, planned output is as follows:

Single $375$ units

Double $125$ units

Standard$/$Budget to make one dugout Single Double

Direct Machine Hours $6\mathrm{.}00010\mathrm{.}000$

Direct Labor Hours $10\mathrm{.}00014\mathrm{.}000$

Direct Labor Cost per Hour $$14\mathrm{.}00$ $$20\mathrm{.}00$

Direct Materials $$220\mathrm{.}00$ $$280\mathrm{.}00$

Fixed Manufacturing Overhead by Department

Assembly $$70,000\mathrm{.}00$

Finishing $$26,250\mathrm{.}00$

Total Manufacturing Overhead $$96,250\mathrm{.}00$

$1$a$.$ Calculate a plant$-$wide overhead allocation rate based on direct$-$machine hours:

Formula for the allocation base: direct labor $ minus

Allocation base for single dugout

Allocation base for double dugout

Total allocation base

Formula for the allocation rate:

$1$b$.$ Allocate fixed manufacturing overhead using a plant$-$wide overhead allocation rate based on direct$-$machine hours:

Formula for allocating fixed overhead:

Allocation to single dugout product line

Allocation to double dugout product line

Total allocation base

$1$c$.$ Determine the per unit costs for each product

Formula used to allocate overhead to individual products

Allocation to single dugouts

Allocation to double dugouts

Formula used to calculate unit product cost

Single dugout

Double dugout

$2$a$.$ Calculate a plant$-$wide overhead allocation rate based on direct$-$labor hours:

Formula for the allocation base:

Allocation base for single dugout

Allocation base for double dugout

Total allocation base

Formula for the allocation rate:

$2$b$.$ Allocate fixed manufacturing overhead using a plant$-$wide overhead allocation rate based on direct$-$labor hours:

Formula for allocating fixed overhead:

Allocation to single dugout product line

Allocation to double dugout product line

Total allocation base

$2$c$.$ Determine the per unit costs for each product

Formula used to allocate overhead to individual products

Allocation to single dugouts

Allocation to double dugouts

Formula used to calculate unit product cost

Single dugout

Double dugout

$3$a$.$ Calculate a plant$-$wide overhead allocation rate based on direct$-$labor $:

Formula for the allocation base:

Allocation base for single dugout

Allocation base for double dugout

Total allocation base

Formula for the allocation rate:

$3$b$.$ Allocate fixed manufacturing overhead using a plant$-$wide overhead allocation rate based on direct$-$labor $:

Formula for allocating fixed overhead:

Allocation to single dugout product line

Allocation to double dugout product line

Total allocation base

$3$c$.$ Determine the per unit costs for each product

Formula used to allocate overhead to individual products

Allocation to single dugouts

Allocation to double dugouts

Formula used to calculate unit product cost

Single dugout

Double dugout

Allocation based on DMH Allocation based on DLH Allocation based on DL$

Single Double Single Double Single Double

Sales price $$645\mathrm{.}00$ $$845\mathrm{.}00$ $$645\mathrm{.}00$ $$845\mathrm{.}00$ $$645\mathrm{.}00$ $$845\mathrm{.}00$

Cost

Gross Profit per unit

Question: Which allocation method makes the most sense?

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