18.00 9.00 Total cost $ 146.00 $ 88.00 Suggested selling price $ 169.95 $ 99.98 Actual research and development costs $240,000 $175,000 Proposed advertising and promotion costs $500,000 $350,000 The difference between the $99.98 suggested selling price for Huron's video disc cleaning unit and its total unit cost of $88. 30.00 10.00 Variable overhead at $8 per hr. Disc Cleaning Duplicator Unit Raw materials $ 44.00 $ 36.00 Machining at $12 per hr. Selling and administrative expenses are not allocated to products. Huron's fixed overhead includes rent and utilities, equipment depreciation, and supervisory salaries. The company controller has gathered the following data to assist management in deciding which product should be selected for production. However, Huron has only enough plant capacity to introduce one of these products during the current year. 18.00 9.00 Total cost $ 146.00 $ 88.00 Suggested selling price $ 169.95 $ 99.98 Actual research and development costs $240,000 $175,000 Proposed advertising and promotion costs $500,000 $350,000 The difference between the $99.98 suggested selling price for Huron's video disc cleaning unit and its total unit cost of $88.00 represents the unit'sįact Pattern: Huron Industries has recently developed two new products, a cleaning unit for video discs and a disc duplicator for reproducing movies taken with a video camera. These costs are usually found in the line item 'Cost of Goods Sold' on the firm's budgeted income statement. This part of the operating budget excludes its direct costs of manufacturing. In general, overhead refers to all costs of making the product or providing the service except those classified as direct materials or direct labor. The selling, general, and administrative expenses (SG&A) of a business firm compose the only non-manufacturing expenses in the firm's operating budget. Disc Cleaning Duplicator Unit Raw materials $ 44.00 $ 36.00 Machining at $12 per hr. Overhead is part of making the good or providing the service, whereas selling costs result from sales activity and administrative costs result from running the business. Fact Pattern: Huron Industries has recently developed two new products, a cleaning unit for video discs and a disc duplicator for reproducing movies taken with a video camera.
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