Problem:
ABC Co produces three items: TV's, VCR's, and Stereos. They use a plant wide overhead rate based on machine hours. The following is available:
Product TV's VCR's Stereos
Units Produces 3000 2000 5000
Machine Hrs (assembly) 1 3 2
Machine Hours (packing) 1 1 1
Direct Labor hrs (per unit) 2 2 2
Direct Mat cost (per unit) $5.00 $45.00 $15.00
Direct labor wage rate is flat $20/hour with no overtime incurred. Also, total OH costs are $380,000 for assembly and $200,000 for packing. Calculate total product cost per stereo.