Figure 4-10 The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
Departmental Data: (expected and actual)

-Refer to Figure 4-10.What is the unit product cost for mops if a plantwide rate is used?
A) $11.00
B) $ 4.00
C) $ 5.40
D) $ 4.12

Question

Figure 4-10 The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
 Departmental Data: (expected and actual)
 
-Refer to Figure 4-10.What is the unit product cost for mops if a plantwide rate is used?
A) $11.00 
B) $ 4.00 
C) $ 5.40 
D) $ 4.12

Quizplus · Accepted Answer

To calculate the unit product cost using a plantwide rate, we first need to calculate the total overhead costs, which is the sum of expected and actual indirect costs: 
$42,000 + $38,000 = $80,000
Next, we need to calculate the total activity level, which is the sum of expected and actual machine hours: 
6,000 + 5,000 = 11,000
Using these figures, we can calculate the plantwide rate: 
$80,000 / 11,000 = $7.27
Finally, we can calculate the unit product cost for mops by multiplying the plantwide rate by the number of machine hours used to produce the mops: 
$7.27 x 0.74 = $5.40. Therefore, the correct choice is C.

Figure 4-10 the Emmanuele Company Has Collected the Following Data