Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department B produces the baseball bats, and Department T produces the tennis rackets. Munoz currently uses plantwide allocation to allocate its overhead to all products. Direct labor cost is the allocation base. The rate used is 100 percent of direct labor cost. Last year, revenue, materials, and direct labor were as follows: Baseball Bats Tennis Rackets

Sales revenue	$	1,550,000		$	1,050,000
Direct labor		200,000			100,000
Direct materials		558,000			290,000

a. Compute the profit for each product using plantwide allocation.

Profit

Baseball Bats: ________

Tennis Rackets: ________ b. Maria, the manager of Department T, was convinced that tennis rackets were really more profitable than baseball bats. She asked her colleague in accounting to break down the overhead costs for the two departments. She discovered that had department rates been used, Department B would have had a rate of 50 percent of direct labor cost and Department T would have had a rate of 200 percent of direct labor cost. Recompute the profits for each product using each departments allocation rate (based on direct labor cost).

Profit

Baseball Bats: ___________

Tennis Rackets: ____________