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    Total product cost for ABC Company

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    ABC Co produces three items: TV's, VCR's, and Stereos. They use a plant wide overhead rate based on machine hours. The following is available:

    Product TV's VCR's Stereos
    Units Produces 3000 2000 5000
    Machine Hrs (assembly) 1 3 2
    Machine Hours (packing) 1 1 1
    Direct Labor hrs (per unit) 2 2 2
    Direct Mat cost (per unit) $5.00 $45.00 $15.00

    Direct labor wage rate is flat $20/hour with no overtime incurred. Also, total OH costs are $380,000 for assembly and $200,000 for packing. Calculate total product cost per stereo.

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    Solution Preview

    Total product cost consists of Direct Material, Direct Labor and Overhead
    Overhead is applied based on machine hours.
    We first calculate the predetermined overhead rate
    Predetermined overhead rate = Total ...

    Solution Summary

    The solution explains how to calculate the total product cost