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The Bernalillo factory of Winrock and Associates makes two models of a portable b. pneumatic compressor: Model #A567 and Model #B234. Information about the year
The Bernalillo factory of Winrock and Associates makes two models of a portable b. pneumatic compressor: Model #A567 and Model #B234. Information about the year 1967 is as follows: (17 marks) Model #A567 Model #B234 Units produced 500 500 Direct materials costs P40,000 P60,000 Direct labour hours 5,000 5,000 Factory overhead for the year was P180, 000. The average wage rate for workers on the Model #A567 production line is P10 per hour. The average wage rate for workers on the Model #B234 production line is P20 per hour. Required: Assume the company allocates overhead based on direct labor hours, what is the overhead rate? (2 marks) ii. What is the total cost per unit for the Model #B234? (6 marks) Assume the company changes the allocation base from direct labor hours to direct labor ii. costs (i.e., direct labor dollars). What is the new overhead rate? (3 marks) Using this new overhead rate, what is the new cost per unit for the Model #B234? iv. (6 marks)
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