The Aleutian Company produces two products, Rings and Dings. They are manufactur
ID: 2385234 • 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.
number of Labor hrs Machine hours
Product units per unit per unit
Rings 1000 4 6
Dings 2000 3 9
All of the machine hours take place in the Fabrication department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $105,000.
The Aleutian Company uses a 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 Dings?
a. $56.75
b. $65.25
c. $23.25
d. $64.50
Explanation / Answer
Total Lab Hrs = LH pu*Rings + LHpu*Dings = 4*1000 +3*2000 = 10000 LHs Total Assly Dept OH = $105,000 So Lab Hr OH rate = $105,000/10000 = $10.50 Total MHs = MH pu*Rings + MHpu*Dings = 6*1000 +9*2000 = 24000 MHs Total Fab Dept OH = $90,000 So Mc Hr OH rate = $90,000/24000 = $3.75 So Overhead cost per unit for Dings = LH Rate*No of Lab Hrs + MH Rate* No of MHs = $10.50*3 + $3.75*9 = $65.25 .....Ans (b)
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