Question
Sportway Inc. produces high-quality tennis racquets and golf clubs using a patented forming process and high-quality hand-finishing. Products move through two production departments: Forming and
Sportway Inc. produces high-quality tennis racquets and golf clubs using a patented forming process and high-quality hand-finishing. Products move through two production departments: Forming and Finishing. The company uses departmental overhead rates to allocate overhead costs. Overhead is allocated based on machine-hours in Forming and direct labour cost in Finishing. Information related to costs for last year is provided below: Tennis Racquets Golf Clubs Annual production and sales (units) 5,000 8,000 Direct materials cost per unit $ 4.50 $ 3.50 Direct labour cost per unit: Forming Department $ 3.00 $ 2.50 Finishing Department $ 6.00 $ 4.00 Machine hours per unit: Forming Department 0.25 0.25 Finishing Department 0.50 In addition, the firm budgets manufacturing overhead at $35,750 in the Forming Department and $46,500 in the Finishing Department. Required: 1. Determine the overhead application rate for each department. (Round your answers to 2 decimal places.) 2. Determine the total cost per unit of tennis racquets and golf clubs. (Round your answers to 2 decimal places.)
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