Question - Blalock Company manufactures and distributes several different products. The company currently uses a plant wide allocation method for allocating overhead at a rate of $20 per direct labor hour. Department A produces products #101X and #102Y. Department A has $524,000 in traceable overhead. Department B manufactures product #103Z. Department B has $780,000 in traceable overhead. The product costs per units are as follows
A) If Blalock changes its allocation basis to machine hours, what is the total product cost per unit for 101x, 102Y and 103Z?
B) If Blalock changes it's overhead allocation to departmental rates, what are the product costs per unit for 101X, 102Y and 103Z, Assuming departments A and B use direct labor hours and machine hour as their respective allocation basis?
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Products
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101X
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102Y
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103Z
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Direct Materials
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$60
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$58
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$46
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Direct Labor
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42
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31.50
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12
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Overhead
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80
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60
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40
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$182
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$149.50
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$98
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Machine hours (per Unit)
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4
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2
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3
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Number of cases (per year)
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3000
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5000
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6000
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