Overhead Application I was able to work out Question 1 but s

Overhead Application

I was able to work out Question 1, but stuck in Question 2.

Here is my process:

I have difficulty calculating the overhead cost. Could anyone help me with that part? Not just the final answers - I need to know how it\'s calculated. Thanks!

Overhead Application Sportway inc. produces high-quality tennis racquets and golf clubs using a patented forming process and high-quality hand-finishing. Products move through two production departments: Forming and Finishing. The company uses departmental overhead rates to allocate overhead costs. Overhead is allocated based on machine-hours in Forming and direct labour cost in Finishing. Information related to costs for last year is provided below Tennis Racquets Golf Clubs 5000 $450 8,000 $350 Direct materials per unit Direct labour cost per unit $800 $3.50 $350 $400 Finishing Department. Machine hours per unit Forming Department.. 075 025 0.25 0.50 In addition, the firm budgets manufacturing overhead at $52,000 in the Forming Department and $45,000 in the Finishing Department. Required 1. Determine the overhead application rate for each department. 2. Determine the total cost per unit of tennis racquets and golf clubs.

Solution

Requirement 1: Determination of Overhead Application Rate: Forming Deparment Finishing Department Tennis Racquets Golf Clubs Tennis Racquets Golf Clubs A Annual Production and Sales 5000 8000 5000 8000 B Machine Hours / Labor cost per unit 0.75 0.25 3.5 4 C Total Machine Hours / Total Labor Cost (A*B) 3750 2000 17500 32000 D Overhead Application rate 6.78 2.26 3.18 3.64 (52000*0.75/5750) (52000*0.25/5750) (45000*3.5/49500) (45000*4/49500) Requirement 2: Total Costper unit: Tennis Racquets Golf Clubs A Direct Material 4.5 3.5 B Direct Labor Forming 8 3.50 Finishing 3.5 4 11.5 7.5 C Overhead Cost: Forming 6.78 2.26 Finishing 3.18 3.64 9.96 5.9 D Total Cost per unit (A+B+C) 25.96 16.9