Imprimo, Inc., produces two types of ink-jet printers: business and home. Imprimo uses a plantwide rate based on direct labor hours to assign its overhead costs. The company has the following estimated and actual data for the coming year:

Required:
1. Calculate the predetermined plantwide overhead rate and the applied overhead for each product, using direct labor hours.
2. Calculate the overhead cost per unit for each product.
3. What if the business printer used 30,000 hours (to produce 30,000 units) instead of 15,000 hours (total expected hours remain the same)? Calculate the effect on the profitability of this product line if all 30,000 units are sold, and then discuss the implications of this outcome.

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Estimated overhead Expected activity Actual activity (direct labor hours): Business printer Home printer Units produced: Business printer Home printer $3,000,000 75,000 15,000 60,000 30,000 300,000