Time Bender Company Makes Watches and Clocks Determine the Setup Cost Per Unit for the Watches and Are

question 4

Essay

Time Bender Company makes watches and clocks.The following estimated data are available for the company's next fiscal year:
Total direct labor costs: $1,700,000
Total setup costs: $190,000
$$\begin{array} { | l | c | c | } \hline & \text { Watches } & \text { Clocks } \\\hline \text { Expected production } & 800,000 & 100,000 \\\hline \text { Direct labor hours needed } & 68,000 D L H & 17,000 D L . H \\\hline \text { Machine setups needed } & 1,000 \text { setups } & 1,000 \text { setups } \\\hline\end{array}$$ Determine the setup cost per unit for the watches and the clocks if setup costs are assigned using a plantwide overhead rate based on direct labor hours.(Round to two decimal places.)

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Definitions:

Underapplied Manufacturing Overhead

The condition in which the manufacturing overhead costs assigned are lower than the real overhead costs that have been incurred.

Overapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Debit

An entry recorded on the left side of an accounting ledger that increases an asset or expense account, or decreases a liability or equity account.

Credit

An accounting entry that increases liability or equity accounts, or decreases asset or expense accounts.