Tiger Furnishings produces two models of cabinets for home theater components, t
ID: 2415065 • Letter: T
Question
Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:
Tiger Furnishings’s CFO believes that a two-stage cost allocation system would give managers better cost information. She asks the company’s cost accountant to analyze the accounts and assign overhead costs to two pools: overhead related to direct labor cost and overhead related to machine-hours.
Compute the product costs per unit assuming that Tiger Furnishings uses direct labor costs and machine-hours to allocate overhead to the products. (Do not round the direct-labor cost rate in your intermediate calculations. Round your answers to two decimal places.)
What is the unit cost of Basic and Dominator?
Please show your work.
Explanation / Answer
Unit Cost is shown as under:
Basic Dominator Total Direct Material $13,000 $4,050 $17,050 Direct Labor 64,500 55,500 120,000 Manufacturing Overhead (Based on ABC) 117,080 89,440 206,520 Total Product Cost $194,580 $148,990 343,570 Units Produced $1,300 $270 1,570 Product Cost per unit $150 $552 $219 Activity Activity Cost Pool Cost driver Basic Dominator Total Utilities $1,600 Machine hour related 1,040 560 1,600 Supplies 4,100 Direct labour cost related 2,204 1,896 4,100 Training 8,200 Direct labour cost related 4,408 3,793 8,200 Supervision 21,800 Direct labour cost related 11,718 10,083 21,800 Machine Depreciation 31,000 Machine hour related 20,150 10,850 31,000 Plant depreciation 21,400 Machine hour related 13,910 7,490 21,400 Miscellaneous 118,420 Direct labour cost related 63,651 54,769 118,420 Total $206,520 $117,080 $89,441 $206,520