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XYZ Manufacturing, Inc. produces three products (Ace, Best, and Champ) in two cost centers, Machining and Assembly. Each product requires one hour of direct labor
XYZ Manufacturing, Inc. produces three products (Ace, Best, and Champ) in two cost centers, Machining and Assembly. Each product requires one hour of direct labor for completion. The following table provides production and cost data for the past year.
- The company wishes to consider using traditional cost center indirect cost allocation. It determines that the Machining Cost Center can use machine hours as the allocation basis for overhead assignment while the Assembly Cost Center can use direct labor costs instead.
- Determine the indirect cost rate for each cost center, and the unit cost including direct and indirect charges for each product?
- If the Machining Cost Center had 1200 machine hours in September '19, what would be its indirect cost ?
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