Executive Images Corporation produces two types of wooden bookends: plain and hand-carved. The following information about the production process is available:

	Plain	Hand-Carved
Number produced	120,000	75,000
Machine hours	95,000	25,000
Inspection hours	7,000	35,000
Revenues	$4,800,000	$4,400,000
Direct costs	$3,800,000	$3,100,000

Total factory overhead is $1,200,000. Of this overhead, $500,000 is related to utilities (cost driver = machine hours) and the remainder is related to quality control (cost driver = inspection hours).

A) If the Corporation uses the ABC allocation method, what is the profit per unit of the “Plain” bookend? Per unit of “Hand-Carved” bookend?

B) If the Corporation uses the traditional method and allocates the factory overhead using machine hours, what is the profit per unit for each product?

Answer rating: 100% (QA)

A Using the ABC allocation method First we need to calculate the predetermined overhead rate for eac... View the full answer