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1. Calculate how many hours required for Cost centre X
Product L 8,000 units*3 hours=24,000 hours
Product M 8,000 units*2,5 hours=20,000 hours
Total hours 44,000
Total cost 88,000
2. Calculate how much cost 1 hour in Cost centre X
88,000/44,000=$2 hour
3. Calculate cost for products
Product L: 8,000 units*3 hours*$2= $48,000
Product M: 8,000 units *2,5 hours *$2= $40,000
The same for Cost centre Y
1. Calculate how many hours required for Cost centre Y
Product L 8,000 units*1 hours=8,000 hours
Product M 8,000 units*2 hours=16,000 hours
Total hours 24,000
Total cost 96,000
2. Calculate how much cost 1 hour in Cost centre X
96,000/24,000=$4 per hour
3. Calculate cost for products
Product L: 8,000 units*1 hours*$4= $32,000
Product M: 8,000 units *2 hours *$4= $64,000
Total cost of overheads for product M: 40,000+64,000=104,000
104,000/8.000 units=$13 per unit
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