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Rodent Corporation produces two types of computer mice, wired and wireless. The wired mice are designed as low-cost, reliable input devices. The company only recently

Rodent Corporation produces two types of computer mice, wired and wireless. The wired mice are designed as low-cost, reliable input devices. The company only recently began producing the higher-quality wireless model. Since the introduction of the new product, profits have been steadily declining. Management believes that the accounting system is not accurately allocating costs to products, particularly because sales of the new product have been increasing.

Management has asked you to investigate the cost allocation problem. You find that manufacturing overhead is currently assigned to products based on their direct labor costs. For your investigation, you have data from last year. Manufacturing overhead was $1,349,000 based on production of 310,000 wired mice and 84,000 wireless mice. Direct labor and direct materials costs were as follows:

Wired Wireless Total
Direct labor $ 1,028,000 $ 383,000 $ 1,411,000
Materials 730,000 665,000 1,395,000

Management has determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year are as follows:

Activity Level
Cost Driver Costs Assigned Wired Wireless Total
Number of production runs $ 715,000 45 10 55
Quality tests performed 504,000 11 17 28
Shipping orders processed 130,000 90 40 130
Total overhead $ 1,349,000

Required:
(a)

How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? (Round "Total Cost Per Unit" to 2 decimal places.)

Overhead Total Cost Per Unit
Wired
Wireless

(b)

How much overhead will be assigned to each product if direct labor cost is used to allocate overhead?What is the total cost per unit produced for each product? (Do not round intermediate calculations. Round "Overhead" to the nearest whole dollar and "Total Cost Per Unit" to 2 decimal places.)

Overhead Total Cost Per Unit
Wired
Wireless

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