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The Cake Company produces two products. The following information is available: Product 1 Product 2 Direct Materials $500 $650 Direct Labor $1, 100 $1,900 Units

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The Cake Company produces two products. The following information is available: Product 1 Product 2 Direct Materials $500 $650 Direct Labor $1, 100 $1,900 Units produced 700 300 The company's overhead costs are $1,500 Required: 1. Assuming the company allocates overhead on the basis of labor cost, compute the overhead and total production cost for both products. 2. Assuming the company allocates overhead on the basis of units produced, compute the overhead and total production cost for both products. 1. Allocation rate using labor cost: Allocation Rate Per Labor $ Expected Costs Product 1 Product 2 Total 98 ::::: Direct Materials Direct Labor Allocated Overhead Total Cost 2. Allocation rate using units produced: Allocation Rate = Per Unit Expected Costs Product A Product B Total Direct Materials Direct Labor Allocated Overhead Total Cost

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