Flyer Corporation Manufactures Two Products,Product a and Product A

Essay

Flyer Corporation manufactures two products,Product A and Product A.Product B is produced on an automated production line.
Overhead is currently assigned to the products on the basis of direct labour hours.The company estimated it would incur $396,000 in manufacturing overhead costs and produce 5,500 units of Product B and 22,000 units of Product A during the current year.Unit costs for materials and direct labour are:
Required:
a)Compute the predetermined overhead rate under the current method of allocation,and determine the unit product cost of each product for the current year.
b)The company's overhead costs can be attributed to four major activities.These activities and the amount of overhead cost attributable to each for the current year are given below:
A.Product B is the more complex of the two products,requiring three hours of direct labour time per unit to manufacture,compared to one and one-half hours of direct labour time for Product B.Product B is of fairly recent origin,having been developed as an attempt to enter a market closely related to that of Product