Part $1$

Given the following information, what is the predetermined overhead rate per unit using

direct labor hours as an application base? And what is the contribution margin per unit if

overhead is applied using expected direct labor hours as a base?

Data:

Sales price per unit.....................$$500$

Direct materials per unit...............$$150$

Direct labor per hour....................$$25$

Direct labor hour needed per unit...$\mathrm{.}2$ hours

Number of units to be produced....$\mathrm{.}50,000$

Total estimated OH$..................$$$250,000$

Part $2$

Continuing with this same scenario, assume that the following activities incur various

OH costs:

Cutting...................$$100,000$ based on $80,000$ cuts

Assembly................$ $75,000$ based on $160,000$ parts

Inspection................$$25,000$ based on $1,000$ inspections

What would the Contribution margin per unit be$,$ given the information above $($and

below$)$ using ABC?

Sales price per unit.....................$$500$

Direct materials per unit...............$$150$

Direct labor per hour....................$$25$

Direct labor hour needed per unit...$\mathrm{.}2$ hours

Number of units to be produced....$\mathrm{.}50,000$

Total estimated OH$..................$$$250,000$

Cutting necessary.....................$\mathrm{.}2$ cuts needed per unit

Assembly...............................$\mathrm{.}4$ assembly parts per unit

Inspection..............................$\mathrm{.}1$ inspection per unit