Costume Kings has two product lines: machine-made costumes and hand-made costumes…. 1 answer below »

Costume Kings has two product lines: machine-made costumes and hand-made costumes. The company assigns $118,000 in manufacturing overhead costs to two cost pools: power costs and inspection costs.

Of this amount, the power cost pool has been assigned $50,000 and the inspection cost pool has been assigned $68,000. Additional information about each product line is shown as follows.

Machine-Made

$450,000 $ 262,400

Units produced and sold
Machine-hours 96,000

Quality control inspection 1,400 hours

Instructions :

Hand-Made

$250,000 $ 119,600

25,000 24,000 600

Sales revenue

Direct labor and materials costs

50,000

a. Allocate the manufacturing overhead from the activity cost pools to each product line. Use what you believe are the most significant cost drivers from the information provided.

b. Compute the cost per unit of machine-made costumes and hand-made costumes.

c. On a per-unit basis, which product line appears to be the most profitable? Explain.

 

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