Yalland Manufacturing Company makes two different products, M and N. The company's two departments are named after the product; for example, Product M is made in Department M. Yaland's accountant has identified the following annual costs associated with these two products:

Requires

a. Identify the Costs that are (1) direct costs of Department M, (2) direct costs to Department N, and (3) indirect costs

b. Select the appropriate cost drivers for the indirect costs and allocate these costs to Departments M and N.

c. Determine the total estimated costs of the products made in Departments M and N. Assume that Yalland produced 2,000 units of Product M and 4,000 units of Product N during the year. If Yalland prices its products at cost plus 40 percent of cost, what price per unit must it charge for Product M and for Product N?

YALLAND MANUFACTURING COMPANY Annual Costs Financial data Salary of V. P. of production division Salary of supervisor Department M Salary of supervisor Department N Direct materials cost Department M Direct materials cost Department N Direct labor cost Department M Direct labor cost Department N Direct utilities cost Department M Direct utilities cost Department N General factorywide utilities Production supplies Fringe benefits Depreciation $160,000 80,000 60,000 300,000 420,000 240,000 680,000 120,000 24,000 36,000 36,000 138,000 600,000 Nonfinancial data Machine hours Department M Machine hours Department N 5,000 1,000 Part c. Assumptions: Units of Product M made Units of Product N made 2,000 4,000