Reference no: EM132523786

Tuggs Corporation manufactures two products, Racket and Table. Table, having been developed as an attempt to enter a market closely related to that of Racket, has been recently created. Of the two products Table is the more complex one thus requiring two and a half hours of direct labour time per unit to manufacture, compared to one hour of direct labour time for Racket. Table is produced on an automated production line.

On the basis of direct labour hours Overhead is currently assigned to the products. The company estimated it would incur $364,000 in manufacturing overhead costs and produce 4,900 units of Table and 22,100 units of Racket during the current year. Unit costs for materials and direct labour are as follows:

                                            Racket                          Table

Direct materials                  $9                        $20

Direct labour                         $7                        $15

Required:

Question 1. Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year.