Doggie Pawz produces two models of dog beds: rectangle and circle. The following information about the...
Doggie Pawz produces two models of dog beds: rectangle and circle. The following information about the costs to produce the company’s products has been provided.
| Category | Estimated Cost | Cost Driver | Rectangle | Circle |
| Unit-Level | $293, 000 | Labor Hours | 200 | 300 |
| Batch-Level | $45, 000 | Inspections | 19 | 15 |
| Product-Level | $390,000 | Storage Space | 2900 sq. ft | 3700 sq.ft |
| Facility-Level | $125,000 | Machine Hours | 4,000 | 7,000 |
a. If all costs are allocated based on machine hours, what is the rate per machine hour?
Homework Answers
Answer a.
Total Estimated Cost = $293000+$45000+$390000+$125000 = $853000
Total Machine Hours = 4000+7000 = 11000 hours
Machine Hour Rate = $853000/11000 = $77.5455 or 77.55 (rounded off to two decimals)
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