EXERCISE 5-13 Overhead Application [103, 105] Sportway Inc. produces high-quality tennis racquets and golf clubs...
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EXERCISE 5-13 Overhead Application [103, 105] Sportway Inc. produces high-quality tennis racquets and golf clubs using a patented forming process and high-quality hand-finishing. Products move through two production departments: Forming and Finishing. The company uses departmental overhead rates to allocate overhead costs. Overhead is allocated based on machine-hours in Forming and direct labour cost in Finishing. Information related to costs for last year is provided below: Tennis Racquets Golf Clubs 5,000 8.000 $3.50 $4.50 $2.50 Annual production and sales (units) Direct materials cost per unit Direct labour cost per unit: Forming Department Finishing Department Machine-hours per unit: Forming Department Finishing Department $3.00 $6.00 $4.00 0.25 0.25 0.50 In addition, the firm budgets manufacturing overhead at $35,750 in the Forming Department and $46,500 in the Finishing Department. Required: 1. Determine the overhead application rate for each department. 2. Determine the total cost per unit of tennis racquets and golf clubs
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