The Kaumajet Factory produces two products - table lamps and desk lamps. It has

Question

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - finishing and production. The overhead budget for the finishing department is $327,360, using 204,600 direct labor hours. The overhead budget for the production department is $568,710 using 71,000 direct labor hours. If the budget estimates that a table lamp will require 2 hours of finishing and 5 hours of production, how much factory overhead will be allocated to each unit of table lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours? Round the answer to the nearest cent.

Select the correct answer.

Explanation / Answer

over head budget per labour hour in finishing department = 327360/204600 = 1.6

over head budget per labour hour in production department = 568710/71000 = 8.01

factory over head for each unit of table lamp = 2 * 1.6 + 5 * 8.01 = 43.25

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