pe7 - REQUIRED: Using the direct labor-hours as the base...

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Overhead is assigned to the products on the basis of direct labor hours.  For the current  year, the company has estimated that it will incur $6,000,000 in overhead cost and  produce 15,000 units of the deluxe model and 120,000 units of the regular model.  The  deluxe model requires 1.6 hours of direct labor time per unit, and the regular model  requires 0.8 hour.   Materials and labor costs per unit are as follows:                                                Model                                Deluxe                   Regular Direct materials       $154                       $112 Direct labor              $ 16                        $  8
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Unformatted text preview: REQUIRED: Using the direct labor-hours as the base for assigning overhead cost to products, compute the predetermined overhead rate. Using this rate and other data from the data above, determine the unit product cost of each model. 1.6 * 15,000 = 24000 & .8 * 120,000 = 96,000. By adding those two numbers it will give us the total number of hours needed to make both of the models. 120,000 hours in total Total over head / total hours: $6,000,000 / 120,000 = $50 per hour in overhead Unit Prices Deluxe: Overhead = 1.6 * $50 = $80 Direct Materials = $154 Direct Labor = $16 $16 + $154 + $80 = $250 total Regular: Overhead = .8 * $50 = $40 Direct Materials = $112 Direct Labor = $8 $40 + $112 + 8 = $160 total...
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pe7 - REQUIRED: Using the direct labor-hours as the base...

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