Real Cool produces air conditioners in two departments: Assembly and Finishing. Budgeted information follows.

Additional production information for two models of its air page 691 conditioners follows.

1. Compute departmental overhead rates and determine overhead cost per unit for each model. Use machine hours to allocate budgeted Assembly costs and use direct labor hours to allocate budgeted Finishing costs.
2. Compute the total product cost per unit for each model.
3. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).

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Department Assembly.. Finishing...... Budgeted Cost $300,000 21,000 Allocation Base Machine hours Direct labor hours Budgeted Usage 6,000 machine hours 3,000 direct labor hours