Reference no: EM132575014

Carrell produces two types of jacket, Blouson and Bomber, in its factory that is divided into two departments, cutting and stitching. The firm wishes to calculate a fixed overhead cost per unit from the following budgeted data.

                                                                                Cutting dept                        Stitching dept

Allocated and apportioned overheads                  $120,000                        $72,000

Labour hours per unit

Blouson                                                               0.05 hours                      0.20 hours

Bomber                                                                0.10 hours                    0.25 hours

Budgeted production

Blouson                                                              6,000 units                  6,000 units

Bomber                                                                  6,000 units                 6,000 units

Question 1: If fixed overheads are absorbed by reference to labour hours, the overhead cost of a Bomber would be:

a $20.00

b $6.67

c $5.33

d $12.00