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Silver Company Manufactures Two Products, a and B, and Incurs

Question 45

Essay

Silver Company manufactures two products, A and B, and incurs overhead costs in two production departments, Mixing and Filling. The annual overhead costs in each production department are as follows:
●Mixing Dept. overhead = $175,000 + $25 per machine-hour
●Filling Dept. overhead = $235,000 + $60 per machine-hour
●Each unit of Product A requires 1 machine-hour in the Mixing Department and 3 hours in the Filling Department.
●Each unit of Product B requires 5 hours in the Mixing Department and 2 hours in the Filling Department.
During 2017, 30,000 units of A and 25,000 units of B were produced.
Calculate the total overhead costs assigned to a unit of Product A, assuming plantwide overhead rates based on machine-hours are used. (Round to two decimal places, when necessary.)

Correct Answer:

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Each unit of Product A used:
1 hour of M...

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