Tiger Furnishings’s CFO believes that a two-stage cost allocation system would give managers better cost information. She asks the company’s cost accountant to analyze the accounts and assign overhead costs to two pools: overhead related to direct labor cost and overhead related to machine-hours. The analysis of overhead accounts by the cost accountant follows:

All other information is the same as in Exercise 6-31.

Required

a. Draw the cost flow diagram that illustrates the two-stage cost allocation of overhead for Tiger Furnishings using the results of the cost accountant’s analysis of accounts.

b. Compute the product costs per unit assuming that Tiger Furnishings uses direct labor costs and machine-hours to allocate overhead to the products.

Transcribed Image Text:

Manufacturing Overhead Overhead Estimate Cost Pool Assignment Utilities Training Supervision Machine depreciation Plant depreciation Miscellaneous S 1,800 6,000 10,000 25,800 32,000 14,200 85,300 Machine-hour related Direct labor cost related Direct labor cost related Direct labor cost related Machine-hour related Machine-hour related Direct labor cost related