JennerMaid Company Manufactures and Distributes Several Different Products

question 10

Essay

JennerMaid Company manufactures and distributes several different products.The company currently uses a plantwide allocation method for allocating overhead at a rate of $20 per direct labor hour.Department 1 produces Product X.Department 1 has $256,000 in traceable overhead.Department 2 manufactures Products Y and Z.Department 2 has $524,000 in traceable overhead.The product costs (per unit)and other information are as follows:

Required:
a.If JennerMaid changes its allocation basis to machine hours,what is the overhead cost per unit for Product X,Y,and Z?
b.If JennerMaid changes its overhead allocation to departmental rates,what are the overhead costs per unit for Product X,Y,and Z,assuming Department 1 uses direct labor hours and Department 2 uses machine hours as their respective allocation bases?

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Definitions:

Newly Introduced Product

A product that has recently been launched into the market, often featuring new or innovative characteristics.

Existing Product

A product that has already been developed and is available in the market for consumers.

Marginal Utility

The additional satisfaction or utility gained by consuming an additional unit of a good or service.

Consumer's Income

The total amount of money earned by an individual or household, influencing their purchasing decisions and capacity.