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Shady Fabrication Group ( SFG ) manufactures components for manufacturing equipment at several facilities. The company produces two, related, parts at its Park River Plant,

Shady Fabrication Group (SFG) manufactures components for manufacturing equipment at several facilities. The company produces
two, related, parts at its Park River Plant, the models SF-08 and SF-48. The differences in the models are the quality of the materials
and the precision to which they are produced. The SF-48 model is used in applications where the precision is critical and thus requires
greater oversight in the production process.
Although sales remain reasonably strong, managers at SFG have noticed that the company is meeting more resistance to the pricing
for SF-08, although there seems to be little need for negotiation on the price of the SF-48 model. As a result, the marketing manager
at SFG has asked the financial staff to review the costs of the two products to understand better what might be happening in the
market.
Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month manufacturing
overhead was $203,400. During that time, the company produced 9,040 units of Model SF-08 and 2,260 units of Model SF-48. The
direct costs of production were as follows:
Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last month were as
follows:
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?
b. How much of the 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?
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