Pink Corporation manufactures 3 different products - A, B and C, and two departments, 1 and 2. They currently use normal costing with a plantwide blended allocation method to allocate overhead based on direct labor hours.

Products A and B are both produced in Department 1. Product C is made in Department 2. Department 1 relies mainly on machines. Department 2 uses mainly skilled labor. Standard per-unit information is as follows:

Product Product Product

Direct Costs: A B C

Direct labor $ 1,500 $ 1,650 $ 1,250

Raw materials $ 1,600 $ 1,000 $ 1,200

Labor hours 100 110 150

Machine hours 100 110 300

Other budgeted information for the company are:

Dept. 1 Dept. 2

Overhead $ 211,680 $ 47,520

Machine hours 50,400 72,000

Labor hours 50,400 36,000

12. The predetermined overhead rate currently being used is

$_____________

13. The standard cost per unit for each product is:

A) $____________ B) $______________ C) $_____________

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14. YOU are the product manager for Product A. The company is using a blended (plantwide rate). What is your opinion of this from the standpoint of YOUR PRODUCT? Do you like the way the overhead is being allocated? Yes or No AND WHY?

________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

15. If the company uses a departmental allocation system for applying overhead, the application rates would be:

Department 1 $_____________ Department 2 $______________

16. The company's products sell in a very price competitive market. Would a more accurate system (such as Activity Based Costing) be worth the looking at? Yes or no and WHY?