Product-Costing Accuracy, Plantwide and Departmental Rates, ABC

Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products:

	Product-Related Data
	Scientific	Business
Units produced per year	72,000	720,000
Prime costs	$255,000	$2,550,000
Direct labor hours	95,500	955,000
Machine hours	54,800	548,000
Production runs	100	150
Inspection hours	2,000	3,000
Maintenance hours	2,250	9,000

	Department Data
	Department 1	Department 2
Direct labor hours:
Scientific calculator	73,400	22,100
Business calculator	105,050	849,950
Total	178,450	872,050
Machine hours:
Scientific calculator	27,100	27,700
Business calculator	444,440	103,560
Total	471,540	131,260
Overhead costs:
Setup costs	$234,000	$234,000
Inspection costs	185,000	185,000
Power	232,000	167,000
Maintenance	193,000	234,500
Total	$844,000	$820,500

Required:

1. Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours. Round your calculations and answers to the nearest cent.

Plantwide rate	per direct labor hour
Overhead cost per unit:
Scientific	per unit
Business	per unit

2. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Round departmental rates and the overhead cost per unit to the nearest cent if rounding is required.

Departmental rates:
Department 1	per machine hour
Department 2	per direct labor hour
Overhead cost per unit:
Scientific	per unit
Business	per unit

Repeat using direct labor hours for Department 1 and machine hours for Department 2. Round departmental rates and the overhead cost per unit to the nearest cent if rounding is required.

Departmental rates:
Department 1	per direct labor hour
Department 2	per machine hour
Overhead cost per unit:
Scientific	per unit
Business	per unit

3. Compute the overhead cost per unit for each product using activity-based costing. Round your calculations and answers to the nearest cent.

	Overhead Cost
Scientific	per unit
Business	per unit