Ellis Perry is an electronics components manufactures. Information about the com

Question

Ellis Perry is an electronics components manufactures. Information about the company's two products follows: The company incurs 1,447,010 in overhead per year and has traditionally applied overhead on the basis of direct labor hours. How much overhead will be allocated to each product using the traditional direct labor hours allocation base? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000. Overhead allocated to each product What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25. Overhead cost per unit)

Explanation / Answer

(i) Overhead allocated to each product using the traditional direct labor hours allocation base:

AM - 2 = $1447010 * 21000 / 49000 = $620147.14

FM - 9 = $1447010 * 28000 / 49000 = $826862.86

(ii) Overhead cost per unit =

AM - 2 = $620147.14 / 20000 = $31.01

FM - 9 = $826862.86 / 2520 = $328.12

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