Siegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly.

Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that $2,410,000 in overhead costs would be incurred and the company would produce and sell 10,000 units of the deluxe model and 52,400 units of the regular model. The deluxe model requires 2.8 hours of direct labour time per unit, and the regular model requires 1.2 hours. Materials and labour costs follow:

Direct materials cost per unit$140deluxe $88 regular

Direct labour cost per hour 20 15

1. Compute the predetermined overhead rate using direct labour-hours as the basis for allocating overhead costs to products. Compute the unit product cost for one unit of each model.

Predetermined overhead rate per DLH

Unit product cost of Deluxe

Unit product cost of Regular