Figure 1
Harrison Co. produces two products, AB and XY. Information about the current period's production is as follows:
Harrison uses a plantwide rate of £4 per machine hour to apply overhead to production. Budgeted overhead was £392,000, but actual overhead was £376,000.
-Refer to Figure 1 above. What was Harrison Company's unit manufacturing cost for product AB?
A) £15.00
B) £2.40
C) ££17.40
D) £17.80

Question

Quizplus · Accepted Answer

To calculate the unit manufacturing cost for product AB, we need to use the plantwide rate of £4 per machine hour to apply overhead to production. 
The total machine hours for AB are 4,500, so the overhead applied to AB is (4,500 x £4) £18,000.
To calculate the total cost of AB, we add the direct materials cost of £12,000 and the direct labor cost of £54,000 to the overhead applied of £18,000, which gives us a total cost of £84,000 for AB. 
To calculate the unit cost of AB, we divide the total cost of £84,000 by the 4,800 units produced, which gives us a unit manufacturing cost of £17.50. Therefore, the answer is C, £17.40 (rounded to the nearest penny).

Figure 1 Harrison Co. Produces Two Products, AB and XY. Information About