Kunkel company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. data for the two products for the upcoming year follow: mercon wurcon direct materials cost per unit $ 9.00 $ 7.00 direct labor cost per unit $ 6.00 $ 7.00 direct labor-hours per unit 0.20 2.40 number of units produced 4,000 8,000 these products are customized to some degree for specific customers.

using conventional costing system:

unit cost mercon = $21.40 unit cost wurcon = $90.80

total production costs using conventional costing system:

4,000 units of mercon = 4,000 x $21.40 = $85,600 8,000 units of wurcon = 8,000 x $90.80 = $726,400

Explanation:

Mercon Wurcon

Direct materials cost per unit $9.00 $7.00

Direct labor cost per unit $6.00 $7.00

Direct labor-hours per unit 0.20 2.40

overhead rate applied $6.40 $76.80

Number of units produced 4,000 8,000

overhead rate = total overhead / total direct labor hours = $640,000 / [ (4,000 x 0.20) + (8,000 x 2.40) ] = $640,000 / 20,000 = $32 per direct labor hour

unit cost mercon = $9 + $6 + $6.40 = $21.40

unit cost wurcon = $7 + $7 + $76.80 = $90.80