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ABC Manufacturing Inc produces three gadgets (Ace Best and Champ) in two departments Machining and Assembly

ABC Manufacturing, Inc. produces three gadgets (Ace, Best, and Champ) in two departments, Machining and Assembly. Each product requires one hour of direct labor for completion. The following table provides production and cost data for the year.

 

Ace

Best

Champ

Total

Number of units

25,000

15,000

5,000

45,000

Machine hours

2,500

1,500

2,000

6,000

Direct materials

$1,000,000

$450,000

$275,000

$1,725,000

Direct labor

375,000

225,000

75,000

675,000

Overhead

       

Machining

     

900,000

Assembly

     

450,000

Total overhead

     

1,350,000

Tot costs

     

$3,750,000

Required:

Use the plantwide allocation method to determine the unit cost for each product. The allocation bases to choose from are

a. Machine hours.

b. Direct labor costs.

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