Sportway Inc. produces high-quality tennis racquets and golf clubs using a patented forming process and high quality hand-finishing. Products move through two production departments: Forming and Finishing. The company uses departmental overhead rates to allocate overhead costs. Overhead is allocated based on machine-hours in Forming and direct labour cost in Finishing. Information related to costs for last year is provided below:

In addition, the firm budgets manufacturing overhead at $35,750 in the Forming Department and $46,500 in the Finishing Department.

Required:

1 . Determine the overhead application rate for each department.

2. Determine the total cost per unit of tennis racquets and golf clubs.

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Golf Clubs Tennis Racquets Annual production and sales (units).. Direct materials cost per unit . . ..... Direct labour cost per unit: Forming Department Finishing Department . Machine hours per unit: Forming Department Finishing Department . . 5,000 $4.50 8,000 $3.50 $3.00 $2.50 $6.00 $4.00 0.25 0.25 0.50