Find product cost per unit

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Reference no: EM132987035

Wess Company has limited capacity and can produce either its standard product or its deluxe product. Additional information follows.
 
Per Unit                        Standard              Deluxe
Selling price                   $ 92               $ 125
Direct materials                 46                   51
Direct labor                      36                      41

Problem 1. Using a single plantwide rate, the company computes overhead cost per unit of $17 for the standard model and $22 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price to get gross profit per unit.

Problem 2. Using activity-based costing, the company computes overhead cost per unit of $3 for the standard model and $44 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price per unit to get gross profit per unit.

 

Reference no: EM132987035

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