Barton Bicycles manufactures two different bicycles in its factory located in Bryan, Texas: the Cavalier and the Classic. The following information pertains to planned production for the most recent year.

Barton assigns overhead to products based on direct labor dollars, with the overhead rate being established at the beginning of the year using a flexible budget. The variable manufacturing overhead rate in the flexible budget is projected to be 40% of direct labor dollars.

Required:
a. What estimate of fixed manufacturing overhead was used in setting the overhead rate at the beginning of the year?
b. Barton’s management is considering changing the allocation basis from direct labor cost to assembly hours. Each unit of the Classic takes 2.4 hours to assemble, and each unit of the Cavalier takes 0.80 hour to assemble. Calculate the overhead application rate, and compute the unit costs of Classic andCavalier.

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Models Cavalier Classi Projected production (units Unit costs 4,800 3,200 Direct materials Direct labor ($12/hour) Manufacturing overhead $20.00 24.00 8.00 S92.00 $30.00 36.00 72.00 $138.00 Unit cost