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ACCT 2301 Cost Allocation Handout #16 Os company has two production departments in its manufacturing acilities. Home Tools specializes in hond tools for individual home users, and ofessional Tools makes sophisticated tools for professional maintenance Otto's accountant has identified the following annual costs associated with these two products: Facile Salary of vice president of production Salary d e cheme tools Salary Re s to Direct materials cost home tools Direct materials colossional tools Direct labor cosm os Direct labores professionals Direct les coste s Direct uites cosesinatos General factorywide Production salles Pringe benefits Depreciation Nonfinancial data Maching hours, home tools Maching hours, professional tools SI000 54.000 4500 300,000 375.000 335.000 414.000 21.00 1.000 3.500 40.500 150,000 380,000 4,000 2009 Required a. Identify the costs that are the (1) direct costs of Home Tools, (2) direct costs of Professional Tools, and (3) indirect costs using the table below. b. Select the appropriate cost drivers and allocate the indirect costs to home tools and to professional tools. C. Assume that each department makes only a single product. Home Tools produces its Deluxe Drill for home use, and Professional Tools produces the Professional Drill. The company made 30,000 units of Deluxe Drill and 20,000 units of Professional Drill during the year. Determine the total estimated cost of the products made in each department. If Otto prices its products at cost plus 30 percent of cost, what price per unit should it charge for the Deluxe Drill and the Professional Drill? 133

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