Answered: If the company allocates all of its…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2PA: Five Card Draw manufactures and sells 24,000 units of Diamonds, which retails for $180, and 27,000...

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D’Ace Corporation (ACE) manufactures two products, Product DAC and Product DIB. Product DIB requires two hours of direct labour time per unit to manufacture compared to one hour of direct labour time for Product DAC.

Overhead is currently assigned to the products on the basis of direct-labour-hours. The company estimated it would incur $450,000 in manufacturing overhead costs and produce 30,000 units of Product DAC and 7,500 units of Product DIB during the current year. Unit costs for materials and direct labour are:

	Product DAC	Product DIB
Direct material	$12	$35
Direct labour	$10	$20

If the company allocates all of its overhead based on direct labour-hours, the unit product cost of Product DIB would be closest to:

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