JP Ltd manufactures two different types of printers for corporate clients. Cost estimates for the year are as below:

Both printer models require 20 hours of direct labour. The basic model requires 5 hours in Department A and 15 hours in Department B. The premium mode requires 15 hours in Department A and 5 hours in Department B. The budgeted overhead costs in these two production departments are as follows:

Department A:

Variable Cost - $32 per direct labour hour

Fixed Cost - $400,000

Department B:

Variable Cost - $8 per direct labour hour

Fixed Cost - $400,000

The total budgeted number of direct labour hours for the year is 20,000 hours in each department.

Supposing JP were to use normal costing and departmental overhead rates method to allocate manufacturing overhead costs,

Required:

(i) calculate the rate for each of the two production departments

(ii) calculate the product cost of each model.

Basic Model Premium Model Direct Material $800 $1,600 Direct Labour (20 hours 600 600 @ $30 per hour)