Mogoul Manufacturing Company makes two different products, M and N. The company's two departments are named after the products; for example, Product M is made in Department M. Mogoul's accountant has identified the following annual costs associated with these two products.

Identify the costs that are (1) direct costs of Department M, (2) direct costs of Department N, and (3) indirect costs.

Select the appropriate cost drivers for the indirect costs and allocate these costs to Departments M and N.

Determine the total estimated cost of the products made in Departments M and N. Assume that Mogoul produced 2,000 units of Product M and 4,000 units of Product N during the year. If Mogoul prices its products at cost plus 40 percent of cost, what price per unit must it charge for Product M and for Product N?

MOGOUL MANUFACTURING COMPANY Annual Costs Financial data 200,000 Salary of V. P. of production division 80,000 Salary of supervisor Department M 60,000 Salary of supervisor Department N 300,000 Direct materials cost Department M 420,000 Direct materials cost Department N Direct labor cost Department M 240.000 680,000 Direct labor cost Department N Direct utilities cost Department M 120,000 Direct utilities cost Department N 24.000 36,000 General factory wide utilities 36,000 Production supplies Fringe benefits 138,000 720,000 Depreciation Nonfinancial data 5,000 Machine hours Department M 1,000 Machine hours Department N Part c. Assumptions: 2,000 Units of Product M made 4,000 Units of Product N made