Oriole Inc. always stayed abreast of production methods, technology, and business insight. However, it recently realized...
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Oriole Inc. always stayed abreast of production methods, technology, and business insight. However, it recently realized it had ignored an important business consideration: the cost of MOH. The company had not considered more precise MOH cost allocation methods until now. To right this, managers examined the accounting system and interviewed production managers to understand costs. The following four key activity areas emerged as primary sources for all MOH, and related cost driver information is also included here. Activity Facility-level costs Setup costs Automation costs Manual production costs Cost $432,000 168,000 592,000 784,000 "Includes rent, depreciation, and utilities Quantity of Cost Driver 54,000 square feet 7,000 setups 37,000 machine hours 98,000 direct labor hours Additional information for one of Oriole's products, the wall mirror, is provided as follows. Total direct materials costs Total direct labor costs Units produced Usage of cost drivers: Square feet (dedicated production line) Number of setups Machine hours Direct labor hours Total allocation of MOH $571,000 $237,000 50,000 Total product cost per unit 12.000 1,000 8,000 Calculate the allocation of MOH to the wall mirror and its total product cost per unit. (Round cost per unit to 2 decimal places, eg 15.25.) 10,000 /unit Oriole Inc. always stayed abreast of production methods, technology, and business insight. However, it recently realized it had ignored an important business consideration: the cost of MOH. The company had not considered more precise MOH cost allocation methods until now. To right this, managers examined the accounting system and interviewed production managers to understand costs. The following four key activity areas emerged as primary sources for all MOH, and related cost driver information is also included here. Activity Facility-level costs Setup costs Automation costs Manual production costs Cost $432,000 168,000 592,000 784,000 "Includes rent, depreciation, and utilities Quantity of Cost Driver 54,000 square feet 7,000 setups 37,000 machine hours 98,000 direct labor hours Additional information for one of Oriole's products, the wall mirror, is provided as follows. Total direct materials costs Total direct labor costs Units produced Usage of cost drivers: Square feet (dedicated production line) Number of setups Machine hours Direct labor hours Total allocation of MOH $571,000 $237,000 50,000 Total product cost per unit 12.000 1,000 8,000 Calculate the allocation of MOH to the wall mirror and its total product cost per unit. (Round cost per unit to 2 decimal places, eg 15.25.) 10,000 /unit
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