Determine the product cost per unit

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Reference no: EM131285038

Bolt Industries makes camping equipment. One of their products, the camping tent, is under review for its’ pricing procedures. Management is trying to determine the appropriate price of the product.

They use direct labor dollars to allocate corporate overhead. However, they would like to know if the price of the product significantly changes if they allocate out based on using number of inspection hours as the allocation base.

They budgeted $700,000 in manufacturing overhead. Budgeted direct labor dollars is $1 million and budgeted inspection hours are 105,000 hours. Actual direct labor cost is $120,000. Direct Material cost is $88,500. Actual inspection hours were 96,000 hours. They made 12,000 units this year.

Required:

Determine the product cost per unit. Explain the difference.

Reference no: EM131285038

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