Question
Three unique products are manufactured and marketed by ABC Company. ABC's current practice is to apply overhead using a single rate of $8 per direct
Three unique products are manufactured and marketed by ABC Company. ABC's current practice is to apply overhead using a single rate of $8 per direct labor hour. ABC has two production departments with the following traceable costs: Dept 1-$15,000 and Dept. 2-$21,000. The following information applies to the production of cases (12 per case) for Products X, Y, Z:
Product X: Direct Materials is $60, Direct Labor is $60, Overhead is $32 for a total of $152. Machine Hrs per case is 4. #cases/year 150 Product Y: Direct Materials is $88, Direct Labor is $45, Overhead is $24 for a total of $157. Machine Hrs per case is 2. #cases/year 600 Product Z: Direct Materials is $60, Direct Labor is $30, Overhead is $16 for a total of $106. Machine Hrs per case is 3. #cases/year 400
If ABC chooses to use machine hours to allocate overhead, what is the cost per case for each of the three products?
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