Lopez Manufacturing prices its products at full cost plus 40 percent.The company operates two support departments and two producing departments.Budgeted costs and normal activity levels are as follows: Support Department A's costs are allocated based on square metres,and Support Department B's costs are allocated based on number of employees.Department C uses direct labour hours to assign overhead costs to products,while Department D uses machine hours.
One of the products the company produces requires 4 direct labour hours per unit in Department C and no time in Department D.Direct materials for the product cost $45 per unit,and direct labour is $20 per unit.
If the direct method of allocation is used and the company follows its usual pricing policy,what would be the selling price of the product?

Question

Lopez Manufacturing prices its products at full cost plus 40 percent.The company operates two support departments and two producing departments.Budgeted costs and normal activity levels are as follows:  Support Department A's costs are allocated based on square metres,and Support Department B's costs are allocated based on number of employees.Department C uses direct labour hours to assign overhead costs to products,while Department D uses machine hours.
One of the products the company produces requires 4 direct labour hours per unit in Department C and no time in Department D.Direct materials for the product cost $45 per unit,and direct labour is $20 per unit.
If the direct method of allocation is used and the company follows its usual pricing policy,what would be the selling price of the product?

Quizplus · Accepted Answer

The Answer of Lopez Manufacturing prices its products at full cost plus 40 percent.The company operates two support departments and two producing departments.Budgeted costs and normal activity levels are as follows:  Support Department A's costs are allocated based on square metres,and Support Department B's costs are allocated based on number of employees.Department C uses direct labour hours to assign overhead costs to products,while Department D uses machine hours.
One of the products the company produces requires 4 direct labour hours per unit in Department C and no time in Department D.Direct materials for the product cost $45 per unit,and direct labour is $20 per unit.
If the direct method of allocation is used and the company follows its usual pricing policy,what would be the selling price of the product?

Lopez Manufacturing Prices Its Products at Full Cost Plus 40