Reference no: EM132920127

Question - Fox hunting manufactures two products: jackets and hats. It produces 50,000 jackets and 20,000 hats per year. Information for overhead costs for the two products are given below. It has identified three activities, setups, ordering parts and machining. Estimated overhead costs are $ 200,000, $ 300,000 and $ 600,000 respectively. Cost drivers are no. of setups, no. of parts and no. of machine hours respectively. During the year, jackets used 500 setups, 60,000 parts and 12,000 machine hours. Hats used 1,500 setups, 40,000 parts and 6,000 machine hours. Direct Material for Jacket is $ 10 and Direct material for hats is $ 20. Direct labor for jackets as well as hats is $ 15 per unit. Explain the difference in cost per unit of Jackets and Hats. Do not write the numbers in words and call it explanation.