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 $550,000, using 500,000 direct labor hours. The overhead budget for the production department is $400,000 using 80,000 direct labor hours. If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, how much factory overhead will be allocated to each unit of desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours?

a. $11.10

b. $4.91

c. $5.00

d. $7.20

Explanation / Answer

a. $11.10 Statement showing computations Particulars Finishing Production Overhead Budget                        550,000.00                 400,000.00 Direct Labour Hours                        500,000.00                   80,000.00 Factory Overhead rate = Overhead/DL hours                                     1.10                              5.00 Statement showing computations Particulars Amount Finishing depratment Cost = 1*1.10                                     1.10 Production Department cost = 2*5                                   10.00 Overhead Allocated to each unit of Lamp                                   11.10

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