Reference no: EM132802941

Rocky Fountain Corporation makes two types of fountains-Solar and Electric. Data concerning these two product lines appear below:

                                                                         Solar                Electric

Direct materials per unit                             $15.00       $9.00
Direct labor cost per unit                        $6.00             $3.00
Direct labor-hours per unit                        0.6 DLH       0.4 DLH
Estimated annual production and sales     15,000 units         45,000 units

• Solars are more complex to manufacture than Electrics and each unit requires more time on the special equipment.
• The company has a conventional costing system in which manufacturing overhead is applied to units based on direct labor-hours.

Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:

Estimated total manufacturing overhead $486,000
Estimated total direct labor-hours 27,000 DLHs

Required:

Problem 1-a. Compute the predetermined overhead rate based on direct labor-hours.

Problem 1-b. Using the predetermined overhead rate and other data from the problem, determine the unit product cost of each product.