Rising Sun, Inc. produces granola that requires two processes, mixing and baking, to complete. The best-selling type of granola is cherry almond delight. Information related to the 100,000 units of cherry almond delight produced annually is shown in the following table:
Rising Sun's total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on machine hours in the mixing department and direct labor hours in the baking department.
Determine the total product cost of this product line and each unit of cherry almond delight.
Mixing Dept. overhead: $80,000/4,000 MH = $20 per MH
$20 per MH x 200 MH = $4,000 for cherry almond product line
Baking Dept. overhead: $12,500/5,000 DLH = $2.50 per DLH
$2.50 per DLH x 400 DLH = $1,000 for cherry almond product line
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