Question
McLaurin Manufacturing produces two types of electronic data organizers: basic and deluxe. The following information about the production process is available: Basic Deluxe Number produced
McLaurin Manufacturing produces two types of electronic data organizers: basic and deluxe. The following information about the production process is available:
| Basic | Deluxe |
Number produced | 900,000 | 500,000 |
Machine hours | 75,000 | 30,000 |
Inspection hours | 9,000 | 45,000 |
Revenues | $63,000,000 | $45,000,000 |
Direct costs | $38,000,000 | $31,000,000 |
Total factory overhead is $10,000,000. Of this overhead, $4,000,000 is related to utilities and the remainder is related to quality control.
a. Determine the total overhead cost assigned to each type of data organizer using machine hours as the allocation base. Calculate the gross profit per unit for each product.
b. Determine the total overhead cost assigned to each type of data organizer if overhead is assigned using allocation bases appropriate to the overhead costs. Calculate the gross profit per unit of each product.
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