QUESTION TWO:

Parker Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here:

Annual production in units Direct material costs

Direct manufacturing labor costs

Direct manufacturing labor-hours

Mathematical

60,000 $240,000

$75,000

5,000

Financial

120,000 $480,000

$150,000

10,000

80,000 60 750

Machine-hours 40,000 Number of production runs 60 Inspection hours 1,500

Total manufacturing overhead costs are as follows:

Overhead cost pool

Machining costs Setup costs Inspection costs

Cost driver

Total

$720,000 150,000 135,000

Required:

Machine-hours Number of production runs

Inspection hours

Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.

Compute the manufacturing cost per unit for each product.