Overhead Allocation Methods

Revachol Ltdmanufactures two types of disco balls: Plasticand Glass.The business has two support departments (engineering and quality control) and two operating departments (moulding and assembly). Departmental overhead rates are applied based on machine hours for the moulding department and direct labour hours for the assembly department. The annual budgeted level of direct labour hours and machine hours for the two operating departments are as follows:

	Direct labour hours	Machine hours
Moulding	10,500	7,500
Assembly	6,200	9,000

The annual budgeted overhead costs are as follows:

Engineering	Quality control	Moulding	Assembly
$ 30,000	$ 20,000	$ 40,000	$ 80,000

The following schedule notes the allocation bases used to allocate support department costs and reflects each department's use of support department services:

	Provider of the service
	Engineering (Number of service requests)	Quality control (Number of inspections)
Engineering		120
Quality control	160
Moulding	110	580
Assembly	130	900

The Plasticmodel requires direct material costing $10 per unit and direct labour costing $40 per unit. A unit of Plasticis produced 0.5 machine hours in the moulding department and 1.5 labour hours in the assembly department. The Glassmodelrequires direct material costing $40 per unit and direct labour costing $80 per unit. A unit of Glassis produced using 0.5 machine hours in the moulding department and 2 labour hours in the assembly department.

Required:

Use the reciprocal services method to allocate support department costs.

1. Calculate the overhead cost per unit of the Glassmodel. (15 marks)
2. Calculate the unit product cost of the Glassmodel. (3 marks)

Can You Please show the workings.