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# Traditional way if dl is the cost driver if dl hour

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Unformatted text preview: ar”? Traditional Way: If DL is the cost driver If DL hour is the cost driver: POHR=2,000,000/100,000 =\$20/DLH Special • OH applied /Unit Regular • OH applied /Unit = 20*25,000/5,000 = 20*75,000/15,000 = \$100/ Unit = \$100/Unit Traditional Way: If DL is the Cost Driver 8 4 4 Product Profitability Unit selling price Unit production costs: Direct material and labor Factory overhead overhead Cost per unit Product margin Special \$ 395 Regular \$ 195 200 100 300 95 80 100 100 180 15 \$ \$ Which one is more profitable? special :475 regular: ! &quot;#\$%&amp;'()*+,-.//%01%2332 Traditional Way: Other Cost Driver? If machine hour is the cost driver: machine hour is the cost driver: POHR=2,000,000/150,000 =\$13. 3/MH Regular Special • OH applied /Unit • OH applied /Unit = 100,000/15,000*13.3 = \$89 =50,000/5,000* \$13.3 = \$133 Unit selling price Unit production costs: Direct material and labor Factory overhead Cost per unit Product m argi n Special: \$310,000; Special \$ 395 Regular \$ 195 200 133 333 62 80 89 169 26 26 \$ \$ Regular: \$390,000 Which Which product? S...
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## This document was uploaded on 03/13/2014 for the course RSM RSM222 at University of Toronto- Toronto.

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