Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons The metal used in Standard is easy to work with and there are few quality issues or reworking required on the machines The metal used in Ultra is more difficult to work with and often needs additional machine time and rework Data on expected operations and direct costs for the next fiscal year follow Standard Ultra Total Units produced 44,000 14,500 58,500 Direct labor hours used 132,000 22,500 154,500 Machine hours used 22,000 22,500 44,500 Direct materials costs $ 3,244,000 $ 4,321,000 $ 7,565,000 Direct labor costs 2,520,000 855,000 3,375,000 The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year Account Amount Administration $ 825,400 Engineering 4,465,500 Machine operation and maintenance 855,000 Miscellaneous 540,100 Supervision 884,500 Total $ 7,570,500 The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product Overhead costs are allocated based on direct labor hours Required An analyst on the planning process team suggests that a two stage system would improve the estimated product costs The analyst suggests that overhead be first assigned to on one of two cost pools Machine related and labor related Machine related overhead consists of the accounts Engineering and Machine operation and maintenance Labor related overhead consists of the remaining manufacturing overhead Machine related costs would be allocated based on machine hours Labor related overhead would be allocated based on direct labor cost Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst Note Do not round your intermediate calculations Round your final answers to 2 decimal places Show less Standard Ultra Product cost per unit

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Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons.

Hall, Incorporated manufactures two components, Standard and Ultra, that are designed for the same function, but are made of different metals for operational performance reasons. The metal used in Standard is easy to work with and there are few quality issues or reworking required on the machines. The metal used in Ultra is more difficult to work with and often needs additional machine time and rework.

Data on expected operations and direct costs for the next fiscal year follow:

	Standard	Ultra	Total
Units produced	44,000	14,500	58,500
Direct labor-hours used	132,000	22,500	154,500
Machine-hours used	22,000	22,500	44,500
Direct materials costs	$ 3,244,000	$ 4,321,000	$ 7,565,000
Direct labor costs	2,520,000	855,000	3,375,000

The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year:

Account	Amount
Administration	$ 825,400
Engineering	4,465,500
Machine operation and maintenance	855,000
Miscellaneous	540,100
Supervision	884,500
Total	$ 7,570,500

The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours.

Required:

An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.

Note: Do not round your intermediate calculations. Round your final answers to 2 decimal places.

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