Multiple production department overhead rates The total factory overhead for Osp
ID: 2387406 • Letter: M
Question
Multiple production department overhead ratesThe total factory overhead for Ospina Company is budgeted for the year at $1,704,000 and divided into two departments: Fabrication, $1,344,000 and Assembly, $360,000. Morris manufactures two office furniture products: credenzas and desks. Each credenza requires four direct labor hours in Fabrication and two direct labor hours in Assembly. Each desk requires three direct labor hours in Fabrication and two direct labor hours in Assembly. Each product is budgeted for 8,000 units of production for the year.
If required, round all per unit answers to nearest whole cent.
b. Determine the departmental factory overhead rates for both departments.
Fabrication $ per direct labor hour
Assembly $ per direct labor hour
Explanation / Answer
On to part b.... We'll need some information from part a on DL hours... Cadenzas: 32,000 hours in fabrication 16,000 hours in assembly Desks: 24,000 hours in fabrication and 16,000 hours in assembly From this we'll need to total the hours by department 32,000+24,000 = 56,000 fabrication hours 16,000+16,000 = 32,000 assembly hours Then we can the budgeted overhead given in the problem as the numerator for our per hour fraction. The total hours by department will be the denominator Fabrication: 1.344M Cost / 56,000 total hours = $24 per fabrication DL hour Assembly: 360K cost / 32,000 total hours = $11.25 per assembly DL hour
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.