Question 4 Perdon Corporation manufactures safes-large mobile safes, and large w

Question

Question 4 Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead Mobile Safes Walk-in Safes Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line 200 300 450 800 50 200 350 1,700 The total estimated manufacturing overhead was $ 280,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, eg. 12.25.) per unit One mobile safe One walk-in safe per unit Attempts: 0 of 4 used Check Answer

Explanation / Answer

Total Manufacturing Overhead = 280000

Total Number of labor hours = 800 + 1700 = 2500 hours

Overhead cost per hour = 280000 / 2500 = 112 per hour

Number of hours per Unit =

Mobile safe = 800 hours / 200 units = 4 hours

Walk in safe = 1700 hours / 50 Units = 34 hours

Manufacturing overhead allocated on the basis of labor hours =

Mobile safe = 4 hours * 112 = $ 448 per Unit

Walk in safe = 34 hours * 112 = $ 3808 Per Unit

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