Problem 3-60 Plantwide versus Departmental Overhead Rates; Product Pricing (LO 3-1, 3-4, 3-7) [The following information applies to the questions displayed below.] TeleTech Corporation manufactures two different color printers for the business market. Cost estimates for the two models for the current year are as follows: Basic System Advanced System Direct material: $ 400 $ 800 Direct labor (20 hours at $16 per hour) 320 320 Manufacturing overhead* 460 460 Total $ 1,180 $ 1,580 *The predetermined overhead rate is $23 per direct-labor hour. Each model of printer requires 20 hours of direct labor. The basic system requires 5 hours in department A and 15 hours in department B. The advanced system requires 15 hours in department A and 5 hours in department B. The overhead costs budgeted in these two production departments are as follows: Department A Department B Variable cost $ 16 per direct-labor hour $ 4 per direct-labor hour Fixed cost $ 260,000 $ 260,000 The firms management expects to operate at a level of 20,000 direct-labor hours in each production department during the current year. (This estimate is based on the practical capacity of each department.)

Required informatio Problem 3-60 Plantwide versus Departmental Overhead Rates; Product Pricing (LO 3-1, 3-4, 3-7) [The following information applies to the questions displayed below.] TeleTech Corporation manufactures two different color printers for the business market. Cost estimates for the two models for the current year are as follows Basic Advanced System System 400800 320 460 $1,180 $1,580 Direct material: Direct labor (20 hours at $16 per hour) Manufacturing overhead* 320 460 Total The predetermined overhead rate is $23 per direct-labor hour Each model of printer requires 20 hours of direct labor. The basic system requires 5 hours in department A and 15 hours in department B. The advanced system requires 15 hours in department A and 5 hours in department B. The overhead costs budgeted in these two production departments are as follows Department A Department B Variable cost Fixed cost 16 per direct-labor hour 4 per direct-labor hour $260,000 $260,000 The firm's management expects to operate at a level of 20,000 direct-labor hours in each production department during the current year. (This estimate is based on the practical capacity of each department.)