Hi Def Video Co makes two types of digital DVD players, economy and deluxe, with the following per unit cost information:
$ECONOMY $DELUXE
DIRECT MATERIALS $50 $100
DIRECT LABOR $25 $25
MANUFACTURING OVERHEAD ? ?
TOTAL MANUFACTURING OVERHEAD ? ?
UNITS PRODUCED $8000 $2000
The company currently applies $1,000,000 in manufacturing overhead to these two products on the basis of direct labor hours. Both products require two hours of direct labor to make one. If the applied overhead rate is $50 per direct labor hour, what is the final manufacturing cost per unit of the Deluxe model?
A. 50
B. 175
C. 100
D 225
