20. The Kaumajet Factory produces two products-table lamps and desk lamps. It ha
ID: 2598451 • Letter: 2
Question
20. 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 $416,754, using 304,200 direct labor hours. The overhead budget for the Production Department is $510,204 using 73,200 direct labor hours. If the budget estimates that a table lamp will require 4 hours of finishing and 7 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to table lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 5,500 units are produced? a. $148,598 b. $69,645 c. $38,335 d. $298,485
Explanation / Answer
Answer: Option d. $298,485
Finishing department overhead rate = $416,754 / 304,200 = $1.37 per direct labor hour
Production department overhead rate = $510,204 / 73,200 = $6.97 per direct labor hour
Allocation of overheads:
Finishing department: $1.37 x 4 x 5,500 = $30,140
Production department: $6.97 x 7 x 5,500 = $268,345
Total factory overheads allocated to lamps = $30,140 + $268,345 = $298,485
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