Red Ralder Company uses a plantwide overhead rate with direct labor hours as the

Question

Red Ralder Company uses a plantwide overhead rate with direct labor hours as the allocation base. Next year, 600,000 units are expected to be produced taking 0.95 direct-labor hours each. How much overhead will be assigned to each unit produced glven the following estimated amounts? Estimated: Manufacturing overhead costs Direct labor hours Machine hours Department 1 $2,570,000 188,000 DLH 32,000 MH Department 2 $960,000 130,000 DLH 10,000 MH O $58.62 per unit O $10.55 per unit O $13 67 per unit O $6.98 per unit O $1110 per unit

Explanation / Answer

Answer is 10.55 per unit Explanation: Total Estimated OH of the plant (2570000+960000) 3530000 Divide: Total Estimated DLH (188000+130000) 318000 OH rate per DLH 11.10063 per DLH Labour hours required per unit 0.95 hr per unit OH cost per unit produced 10.55 per unit

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