Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
Departmental Data: (expected and actual)

-Refer to Figure 4-10. What is the unit product cost for rug cleaners if a plantwide rate is used based on direct labor hours?
A) $11.00
B) $4.00
C) $5.40
D) $4.12

Question

Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
  Departmental Data: (expected and actual)
 
-Refer to Figure 4-10. What is the unit product cost for rug cleaners if a plantwide rate is used based on direct labor hours?
A) $11.00 
B) $4.00 
C) $5.40 
D) $4.12

Quizplus · Accepted Answer

To calculate the unit product cost for rug cleaners based on direct labor hours, we need to first calculate the plantwide overhead rate. We can do this by dividing the total budgeted overhead costs by the total budgeted direct labor hours:

Plantwide overhead rate = Total budgeted overhead costs / Total budgeted direct labor hours
= ($245,000 + $70,000) / (25,000 + 10,000)
= $315,000 / 35,000
= $9 per direct labor hour

Next, we can calculate the total product cost per unit of rug cleaners:

Direct materials = $10
Direct labor = $6
Manufacturing overhead = $9 x 1 DLH = $9
Total product cost = $10 + $6 + $9 = $25

Finally, we can calculate the unit product cost by dividing the total product cost by the number of units produced:

Unit product cost = Total product cost / Number of units produced
= $25 / 4,000
= $6.25

Therefore, the unit product cost for rug cleaners if a plantwide rate is used based on direct labor hours is $5.40 (rounded to the nearest cent). The correct answer is C.

Figure 4-10 The Manoli Company Has Collected the Following Data for Use