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Rivera Company manufactured two products, A and B, during April. For purposes of product costing, an overhead rate of $2.94 per direct-labor hour was used,
Rivera Company manufactured two products, A and B, during April. For purposes of product costing, an overhead rate of $2.94 per direct-labor hour was used, based on budgeted annual factory overhead of $735,000 and 250,000 budgeted annual direct-labor hours, as follows: Department 1. Department 2 Budgeted Overhead Budgeted Hours $420,000 175,000 315,000 75,000 $735,000 250,000 The average number of labor hours required to manufacture one unit of each of these products was: Product B In Department 1 In Department 2 Total Product A 2 3 - 2 During April, production units for products A and B were 2,000 and 3,000, respectively. Required: (1) Using a plantwide overhead rate, what are total overhead costs assigned to products A and B, respectively? (2) Using departmental overhead rates, what are total overhead costs assigned to products A and B, respectively? (3) Assume that materials and labor costs per unit of Product B are $12 and that the selling price is established by adding 40% of total costs to cover profit and selling and administrative expenses. What difference in selling price would result from the use of departmental overhead rates
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