The Aleutian Company produces two products, Rings and Dings. They are manufactur
ID: 2337901 • Letter: T
Question
The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments—Fabrication and Assembly. Data for the products and departments are listed below.
All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $80,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $66,700.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the overhead cost per unit for Rings?
A) $41.13
B) $6.09
C) $48.74
D) $51.97
Number of Units 910 2,100 Labor Hours Per Unit 4 4 Machine Hours Per Unit Product Rings DingsExplanation / Answer
Total Labor Hours: Products No of Units Labor Hours Total Rings 910 4 3640 Allocation Rates: Fabrication Dept Assembly Dept Dings 2100 4 8400 Overheads 80000 66700 A 12040 Allocation Base MH DLH Allocation Base 29470 12040 B Total Machine Hours: Allocation Rate 2.71 5.54 A/B Products No of Units MH Total Rings 910 7 6370 Dings 2100 11 23100 29470 Allocation to Rings: Activity Allocation Rate Total Labor Hours Used 4 5.54 22.16 Machine Hours 7 2.71 18.97 41.13 Answer is A
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