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
Department D has recently purchased and installed new computerized equipment for Product X. This equipment will increase the overhead costs by $2,700 and decrease labor costs in Department D by $3.00 per case. Cindy believes that her department will be allocated some of Department D’s overhead if Smelly uses machine hours to allocate overhead. If Smelly uses departmental rates, what are the product costs per case for Product X assuming Departments C and D use direct labor hours and machine hours as their respective allocation bases? (Points : 1)
$81.98
$79.50
$77.48
$75.00