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    Overhead rate and unit product cost

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    Cabigas Company manufactures two products, Product C and Product D. The company estimated it would incur $167,140 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor hours. Data concerning the current period's operations appear below:

    Product C Product D
    Estimated volume 2,000 units 2,700 units
    Direct labor hours per unit 2 hrs 0.80 hrs
    Total Hours 4,000 2,160 hrs
    Direct materials cost per unit $21.50 $24.10
    Direct labor cost per unit $24.00 $ 9.60

    Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year.

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    Solution Summary

    The solution calculates the overhead rate and unit product cost.