The Aleutian Company produces two products, Rings and Dings. They are manufactur
ID: 2526506 • 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.
Product
Number of
Units
Labor Hours
Per Unit
Machine Hours
Per Unit
Rings
1,030
4
3
Dings
1,810
7
10
All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $87,600. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $74,300.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the Assembly Department overhead rate per labor hour?
a.$4.43
b.$4.13
c.$4.39
d.$5.18
Product
Number of
Units
Labor Hours
Per Unit
Machine Hours
Per Unit
Rings
1,030
4
3
Dings
1,810
7
10
Explanation / Answer
Answer
A.Product Rings = 1030 units x 4 labor hours per unit = 4,120 hours
B.Product Dings = 1810 units x 7 Labor hour per unit = 12,670 hours
Total Labor Hours to be used as an ALLOCATION BASE for assembly department = 4120 + 12670 = 16,790 labor hours.
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