The Delph Company produces two products, Blinks and Dinks. They are manufactured
ID: 2585554 • Letter: T
Question
The Delph Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and assembly. Data for the products and departments are listed below.
Product
Number of units
Labor hrs per unit
Machine hours per unit
Blinks
1,000
4
5
Dinks
2,000
2
8
All of the Machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Delph 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 Blinks?
a)$56
B)$44
c)$64
d)$60
Product
Number of units
Labor hrs per unit
Machine hours per unit
Blinks
1,000
4
5
Dinks
2,000
2
8
Explanation / Answer
Fabrication department rate :
Total machine hour : (1000*5+2000*8) = 21000
Fabrication department rate = 84000/21000 = 4 per machine hour
Assembly department rate :
Total direct labour hours = (1000*4+2000*2)=8000 Labour hour
Assembly department rate = (72000/8000)=9 per labour hour
Total overhead cost for blinks = (1000*5*4)+(1000*4*9) = 56000
Overhead cost per unit = (56000/1000)=56 per unit
so answer is a) $56
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