Exercise 17-6 Assigning overhead costs using the plantwide rate and departmental
ID: 341288 • Letter: E
Question
Exercise 17-6 Assigning overhead costs using the plantwide rate and departmental rate methods LO P1, P2
Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made from components shaped in the fabricating department and assembled in the assembly department. Information related to the 28,000 desk lamps produced annually follows.
Expected overhead cost and related data for the two production departments follow.
Required
1. Determine the plantwide overhead rate for Laval using direct labor hours as a base.
2. Determine the total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate.
3. Compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department.
4. Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.
Required 2:
Required 3: Compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department. (Round your answers to 2 decimal places.)
Required 4: Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.
Direct materials $ 270,000 Direct labor Fabricating department (7,500 DLH × $29 per DLH) $ 217,500 Assembly department (15,800 DLH × $21 per DLH) $ 331,800 Machine hours Fabricating department 14,400 MH Assembly department 20,100 MHExplanation / Answer
Answer
fabricating department cost
310000
Assembly department cost
445000
Total Overhead Cost (A)
$755000
Fabricating Deptt DLHs
200000
Assembly Deptt DLHs
275000
Total Direct Labor Hours (B)
475000
Plant wide overhead rate for Laval (A/B)
$1.59 per DLHs
DLHs
Plant wide overhead rate for Laval
Overhead allocated
Fabricating Department
7500
$1.59
$11925
Assembly Department
15800
$1.59
$25122
Total Overhead
$37047
Direct material
2$70000
Direct labor
$549300
Total manufacturing cost
$856347
Total Units
28000
Manufacturing cost per unit
$30.58
Fabricating Department
Assembly Department
Overhead (A)
$310000
$445000
Allocation base
Machine hours
Direct labour hours
Hours (B)
164000
275000
Overhead rate per allocation base hour (A/B)
$1.89 per MH
$1.62 per DLH
Working
Fabricating Department
Assembly Department
Overhead rate per allocation base hour
$1.89 per MH
$1.62 per DLH
Desk Lamp hours
14400 MHs
15800 DLHs
Overhead allocated
$27216
$25596
Manufacturing cost per unit
Total Overhead [27216+25596]
$52812
Direct material
$270000
Direct labor
$549300
Total manufacturing cost
$872112
Total Units
28000
Manufacturing cost per unit
$31.15
fabricating department cost
310000
Assembly department cost
445000
Total Overhead Cost (A)
$755000
Fabricating Deptt DLHs
200000
Assembly Deptt DLHs
275000
Total Direct Labor Hours (B)
475000
Plant wide overhead rate for Laval (A/B)
$1.59 per DLHs
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