Cabigas Company manufactures two products, Product C and Product D. The company
ID: 2393465 • Letter: C
Question
Cabigas Company manufactures two products, Product C and Product D. The company estimated it would incur $186,330 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below:
Compute the predetermined overhead rate under the current method. (Round your answer to 2 decimal places.)
Determine the unit product cost of each product for the current year. (Do not round your intermediate calculations. Round your final answer to 2 decimal places.)
Cabigas Company manufactures two products, Product C and Product D. The company estimated it would incur $186,330 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below:
Explanation / Answer
1)
Manufacturing overhead cost during the period = 186330
Total direct labor hours = Direct labor hours required in Product C + Direct labor hours required in Product D
= 2000*5.25 + 2700*2.10 = 10500 hours + 5670 hours = 16170 hours
Predetermined overhead rate = Manufacturing overhead cost during the period /Total direct labor hours
= 186330/16170 = 11.52
Predetermined overhead rate = $11.52 per DLH
2)
Calculation of unit product cost of each product for the current year: (Amount in $)
Particulars
Product C
Product D
Direct materials cost per unit (A)
24.75
27.30
Direct labor cost per unit (B)
37.00
12.20
Overhead cost per unit (Predetermined overhead rate* Direct labor-hours per unit) (C)
60.48
(11.52*5.25)
24.19
(11.52*2.10)
Unit Product cost (A+B+C)
122.23
63.69
Particulars
Product C
Product D
Direct materials cost per unit (A)
24.75
27.30
Direct labor cost per unit (B)
37.00
12.20
Overhead cost per unit (Predetermined overhead rate* Direct labor-hours per unit) (C)
60.48
(11.52*5.25)
24.19
(11.52*2.10)
Unit Product cost (A+B+C)
122.23
63.69