MISSING ANSWER TO QUESTION 3. PLEASE PROVIDE STEP FOR STEP FOR QUESTION 3

THE REST OF THE ANSWERS ARE GOOD

PLEASE EXPLAIN STEP BY STEP ALL NUMBERS OBTAINED. THE ANSWER TO THE FIRST QUESTIONS ARE CORRECT, BUT i DON'T KNOW HOW TO OBTAIN THE REST

Product-Costing Accuracy, Plantwide and Departmental Rates, ABC

Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products:

	Product-Related Data
	Scientific	Business
Units produced per year	75,000	750,000
Prime costs	$237,000	$2,370,000
Direct labor hours	102,600	1,026,000
Machine hours	44,400	444,000
Production runs	100	150
Inspection hours	2,000	3,000
Maintenance hours	2,250	9,000

	Department Data
	Department 1	Department 2
Direct labor hours:
Scientific calculator	77,100	25,500
Business calculator	123,120	902,880
Total	200,220	928,380
Machine hours:
Scientific calculator	22,200	22,200
Business calculator	350,760	93,240
Total	372,960	115,440
Overhead costs:
Setup costs	$213,500	$213,500
Inspection costs	200,000	200,000
Power	268,000	144,000
Maintenance	191,000	259,000
Total	$872,500	$816,500

Required:

1. Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours. Round your calculations and answers to the nearest cent.

Plantwide rate	1.50 THIS IS OK
Overhead cost per unit:
Scientific	2.052 THIS IS OK
Business	2.052 THIS IS OK

2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Round departmental rates and the overhead cost per unit to the nearest cent if rounding is required.

Departmental rates:
Department 1	2.34 THIS IS OK
Department 2	0.89THIS IS OK
Overhead cost per unit:
Scientific	$fill in the blank 6 per unit
Business	$fill in the blank 7 per unit

Repeat using direct labor hours for Department 1 and machine hours for Department 2. Round departmental rates and the overhead cost per unit to the nearest cent if rounding is required.

Departmental rates:
Department 1	$fill in the blank 8 per direct labor hour
Department 2	$fill in the blank 9 per machine hour
Overhead cost per unit:
Scientific	$fill in the blank 10 per unit
Business	$fill in the blank 11 per unit

3. Compute the overhead cost per unit for each product using activity-based costing. Round your calculations and answers to the nearest cent.

	Overhead Cost
Scientific	PLEASE ANSWER THIS QUESTION
Business	PLEASE ANSWER THIS QUESTION

Expert Answer

This solution was written by a subject matter expert. It's designed to help students like you learn core concepts.

Step-by-step

1st step

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Step 1/2

1) Overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours is calculated below:

• Total Overhead = Overhead of department 1 + Overhead of department 2 Total Overhead = $872,500 + $816,500 Total Overhead = $16,89,000
• Total direct labor hours = direct labor hours of department 1 + direct labour hours of department 2 =200,220+928,380 =11,28,600

Plantwide overhead cost per unit direct labor = total overhead total direct labor =$16,89,000 11,28,600 = $1.50 per unit direct labor hour

The overhead per unit cost for scientific and business calculator is calculated below:

Calculators	DEPARTMENT 1 (a)	DEPARTMENT 2 (b)	Total (c=a+b)	Plantwide overhead cost per unit (d)	Total allocation of overhead (e=c*d)	Total Production (f)	Per Unit Overhead (ef)
Scientific	77,100	25,500	1,02,600	$1.50	1,53,900	75,000	$2.05
Business	123,120	902,880	10,26,000	$1.50	15,39,000	7,50,000	$2.05

Step 2/2

2) The departmental rates using machine hours for department 1 and direct labors for department 2 are calculated below:

For Department 1:

Machine Hours	Amount
Scientific Calculator (a)	22,200
Business Calculator (b)	350,760
Total hours (c=a+b)	372,960
Overheard Total (d)	$872,500
Overhead per machine hours (d/c)	$2.34

For Department 2:

Direct labor hours	Amount
Scientific Calculator	25,500
Business Calculator	902,880
Total direct labor hours	928,380
Overhead total	$816,500
Overhead per direct labor hours	$0.88

Now, the overhead cost per unit for each product using departmental rates is calculated as below:

	Department 1			Department 2
Calculators	Machine hours (1)	overhead per machine hours (2)	Allocated overhead (3=1*2)	Direct labor hours (4)	Overhead per labor hours (5)	Allocated overhead (6=4*5)	Total allocated overhead (7=3+6)	Total production(8)	Overhead cost per unit (7/8)
Scientific	22,200	$2.34	$51,948	25,500	$0.88	$22,440	$74,388	75,000	$0.99
Business	350,760	$2.34	$8,20,778.4	902,880	$0.88	$7,94,534.4	$16,15,312	7,50,000	$2.15

The departmental rates using direct labor hours for department 1 and machine hours for department 2 are calculated below:

For Department 1:

Direct labor hours	Amount
Scientific calculator	77,100
Business calculator	123,120
Total hours	2,00,220
Overhead total	$872,500
Overhead per direct labor hours	$4.36

For Department 2:

Machine hours	Amount
Scientific calculator	22,200
Business Calculator	93,240
Total hours	1,15,440
overhead total	$8,16,500
Overhead per machine hours	$7.08

The overhead cost per unit for each product using departmental rates is calculated below:

	Department 1			Department 2
Calculators	Direct labor hours	Overhead per direct labor hour	Allocated overhead	Machine hours	Overheard per machine hour	Allocated overhead	Total allocated overhead	Total production	Overhead cost per unit
Scientific	77,100	$4.36	$3,36,156	22,200	$7.08	$1,57,176	$4,93,332	75,000	$6.58
Business	123,120	$4.36	$5,36,803.2	93,240	$7.08	$6,60,139.2	$11,96,942	7,50,000	$1.60