Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Direct-material cost per unit $ 35 $ 60
Direct-labor cost per unit $20 $20
Type A Type B Total
Setups 50 30 80
Machine hours 16,000 22,500 38,500
Outgoing shipments 100 75 175
The firm’s total overhead of $3,080,000 is subdivided as follows: manufacturing setups, $672,000; machine processing, $1,848,000; and product shipping, $560,000.
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Set up= 672,000/80= $8400 per setup
Machine processing= 1,848,000/38,500= $48 per machine hour
Shipping= 560,000/175= $3200 per shipping
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Type A:
Set up= 8400*50= $420,000
Machine processing= 48*16,000= $768,000
Shipping= 3,200*100= 320,000
Total= 1,508,000
Unit cost Type A= 35 + 20 + (1,508,000/8,000units)= $243.5
Type B:
Set up= 8400*30= $252,000
Machine processing= 48*22,500= $1,080,000
Shipping= 3,200*75= 240,000
Total= 1,572,000
Unit cost Type B= 60 + 20 + (1,572,000/15,000)= $184.8
2) applied overhead= $80*16,000= 1,280,000
$300,000 understated
