Questions 24 of 4 IThe a single product called LEC 40 Then t

Questions 2-4 (of 4) IThe a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 abor tme per unlt to 40 requires only 0.40 hours of direct labor time per unilt and only a smell amount of machining Manufacturing overhead costs are currently assigned to products on the basis of direct labor-hours In the automated portion of the plant. The LEC material and direct labor costs per unit are as follows: LEC 40 LEC 90 $50.00 $ 6.00 $12.00 30.00 Direct labor (040 hours and 0.80 hours o s1500 per hour) Management estimates that the company will incur 5$ current year and 60,000 units of the LEC 40 and 20,000 units of the LEC 90 will be produced and sold 2. 10.00 points overhead cost on the basis of direct labor hours. (Round your answer to 2 decimal OO0 Fa

Solution

3(a) Manufacturing overhead per unit LEC 40 = $         5.06 Manufacturing overhead per unit LEC 90 = $      30.42 (b) Unit product cost for LEC 40 = $      41.06 Unit product cost for LEC 90 = $      92.42 Workings: LEC 40 1 Calculating total amount of manufacturing overhead cost using activity based costing Maintaining Inventory = $150 X 600 = $           90,000 Processing purchase orders = $65 X 2000 = $       1,30,000 Quality control = $20 X 500 = $           10,000 Machine related = $46 X 1600 = $           73,600 (a) Total = $       3,03,600 (b) Total produced units =               60,000 (a) / (b) Manufacturing overhead per unit = $               5.06 2 Unit product cost Direct material = $      30.00 Direct labor = $         6.00 Manufacturing overhead per unit = $         5.06 Unit product cost = $      41.06 LEC 90 1 Calculating total amount of manufacturing overhead cost using activity based costing Maintaining Inventory = $150 X 900 = $       1,35,000 Processing purchase orders = $65 X 800 = $           52,000 Quality control = $20 X1750 = $           35,000 Machine related = $46 X 8400 = $       3,86,400 (a) Total = $       6,08,400 (b) Total produced units =               20,000 (a) / (b) Manufacturing overhead per unit = $             30.42 2 Unit product cost Direct material = $      50.00 Direct labor = $      12.00 Manufacturing overhead per unit = $      30.42 Unit product cost = $      92.42