Pacifica Industrial Products Corporation makes two products

Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 43,000 units next year and Product L is expected to sell 8,600 units. A unit of either product requires 0.5 direct labor-hours. The company\'s total manufacturing overhead for the year is expected to be $2,193,000 Required: 1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product? (Round your answers to 2 decimal places.) Product H Product L Overhead cost per unit 1-b. Compute the total amount of overhead cost that would be applied to each product. Product H Product L Total Total overhead cost

Solution

Req 1-a: Estimated Overheads 2193000 Divide: Total labour hours 25800 (43000*0.50 +8600*0.50) OH cost per hour 85 OH cost per unit Product H Product L Hours required per unit 0.5 0.5 OH cost per hour 85 85 OH cost per unit 42.5 42.5 Req 1-b: Product H Product L Total OH cost per unit 42.5 42.5 42.5 Number of Units 43000 8600 51600 Total OH cost 1827500 365500 2193000 Req 2: Product H Product L Total Overheads allocated 1096500 1096500 Divide: Number of units 43000 8600 Oh cost per unit 25.5 127.5