Reference no: EM132603154

Superman Ltd. manufactures two products called LaserEye and Hurricane. The Hurricane is a more complex product, requiring 0.80 hours of direct labour time per unit to manufacture and extensive machining support. The LaserEye requires only 0.40 hours of direct labour time per unit and only a small amount of machining support. Manufacturing overhead costs are currently assigned to products on the basis of direct labour hours.

Direct material and direct labour costs per unit are as follows:

                                                              Laser Eye                                    Hurricane

Direct Material                                                $30                                      $50

Direct Labour                                       $6 (0.4 hours at $15 per hour)         $12 (0.8 hours at $15 per hour)

Management estimates that the company will incur $912,000 in manufacturing overhead costs during the current year and 60,000 units of the LaserEye and 20,000 units of the Hurricane will be produced and sold.

Required:

Question 1: Compute the predetermined manufacturing overhead rate assuming that the company continues to apply manufacturing overhead cost on the basis of direct labour hours and the unit product cost of each product