Applied Overhead and Unit Overhead Cost: Plantwide Rates Seco, Inc., produces two types of clothes...
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Applied Overhead and Unit Overhead Cost: Plantwide Rates
Seco, Inc., produces two types of clothes dryers: deluxe and regular. Seco uses a plantwide rate based on direct labor hours to assign its overhead costs. The company has the following estimated and actual data for the coming year:
Estimated overhead $2,622,000
Expected activity 57,000
Actual activity (direct labor hours):
Deluxe dryer 14,000
Regular dryer 43,000
Units produced:
Deluxe dryer 28,000
Regular dryer 215,000
Required:
1.Calculate the predetermined plantwide overhead rate, using direct labor hours.
Calculate the applied overhead for each product, using direct labor hours for deluxe and regular dryers
2.Calculate the overhead cost per unit for each product. If required, round your answers to the nearest cent for deluxe and regular dryers.
3.What ifthe deluxe product used 28,000 hours (to produce 28,000 units) instead of 14,000 hours (total expected hours remain the same)? Calculate the effect on the profitability of this product line if all 28,000 units are sold.
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