Reference no: EM131783598

Question - Smelly Perfume Company manufactures and distributes several different products. They currently use a plant-wide allocation method for allocating overhead at a rate of $7 per direct labor hour. Cindy is the department manager of Department C which produces Products J and P. Diane is the department manager of Department D which manufactures Product X. The product costs (per case of 24 bottles) and other information are as follows:

Products                                J                     P                           X

Direct materials                    $100.00          $ 72.00               $48.00

Direct labor                           42.00                  31.50               12.00

Overhead                              28.00                   21.00             14.00

                                            $170.00               $124.50           $74.00

Machine hours                        4                           2                       3

Number of cases (per year)     300                        500                600

If Smelly changes its allocation basis to machine hours, what is the total product cost per case for Product P?

$163.50

$144.00

$138.15

$117.15