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The lead accountant has compiled the following data in Overhead Costs ration for allocating overhead to three cost drivers. Utilities $50,000 Utilities (p hone, electric,
The lead accountant has compiled the following data in Overhead Costs ration for allocating overhead to three cost drivers. Utilities $50,000 Utilities (p hone, electric, water, gas, etc.) Admin/MGMT $150,000 CEO, VPs, Supervisors, Secretary staff costs Factory Costs 500,000 Building lease & equipment $700,000 (10) A. Allocate the $700,000 of monthly overhead costs to the following three cost drivers: 1) Units Produced 2) Direct Labor Hours 3) Raw Material Costs to determine the final product cost per unit (which Labor Hrs Per Widget Direct Labor Cost per Widget Std Labor Rate ($/hr: $25.00 Widget-1 Widget-2 Widget-3 $75.00 $150.00 300.00 12 Drivers Units Produced in Factory (all inclusive) 25,500 Widget-1 10,000 units per month Widget-2 15,000 units per month Widget-3 500 units per month Widget-1 30,000 hours per m Widget-2 90,000 hurs per month Widget-3 Direct Labor Hours 126,000 6,000 hours per month 5.00 per unit of Widget-1 20.00 per unit of Widget-2 200.00 Raw Material Costs r unit of (5) B. Which of the three methods causes the Final Product Cost of Widget-3 to exceed $600? In 30 words or less, why did this occur? (5) C. If the current sales price of Widget-3 is only $800, as the lead accountant, name at least TWO strategies you should consider to make Widget-3 a viable product to sell/produce (increasing the sales price is not an option)
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