Exercise $9-30($Algo$)$ Plantwide versus Department Allocation $($LO $9-2,3)$

Trombly Travel Products $($TTP$)$ manufactures and sells travel bags and accessories. TTP produces backpacks at its West Street plant. The different backpack models are identified by the primary material used: canvas, nylon, or leather. The company uses a plantwide rate based on direct labor$-$hours. The plantwide rate is $$5\mathrm{.}00$ per labor$-$hour. All direct labor at TTP is paid $$34$ per hour. Canvas and nylon backpacks are produced in Department $1.$ Leather backpacks are produced in Department $2.$ The product costs $($per backpack$)$ follow.

Canvas Nylon Leather

Direct materials $ $29\mathrm{.}00$ $ $34\mathrm{.}00$ $ $44\mathrm{.}00$

Direct labor $81\mathrm{.}6098\mathrm{.}60105\mathrm{.}40$

Required:

Compute the total unit cost of each backpack model using the plantwide allocation method.

The machines in Department $1$ are older and almost fully depreciated. The equipment in Department $2$ was recently updated and the process in Department $2$ is more highly automated. At the request of the manager of Department $1,$ a cost analyst at TTP provided the following information on overhead costs, machine$-$hours and direct labor$-$hours for the two departments.

Department $1$ Department $2$

Overhead $ $74,520$ $ $101,480$

Machine$-$hours $16,80023,600$

Labor$-$hours $21,60011,800$

Using labor$-$hours as the department allocation base for Department $1$ and machine$-$hours as the department allocation base for Department $2,$ compute the allocation rate for each.

Compute the unit cost of each model of backpack using the department allocation rates computed in requirement $($b$)($labor$-$hours in Department $1$ and machine$-$hours in Department $2).$

Note: Do not round your intermediate calculations.