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The Aleutian Company produces two products, Rings and Dings. They are manufactur

ID: 341505 • 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.

All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $87,800. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $67,600.

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.$3.21

b.$7.64

c.$2.93

d.$8.78


Product Number of
Units
Labor Hours
Per Unit
Machine Hours
Per Unit
  Rings 1,090 3 8   Dings 1,860 3 10

Explanation / Answer

Answer b. $7.64 No. of Units Lab. Hrs Per Unit Total Lab. Hrs. Ring          1,090                 3          3,270 Dings          1,860                 3          5,580 Total          8,850 Assembly Department Overhead Rate = $67,600 / 8,850 lab. Hr. Assembly Department Overhead Rate = $7.64 per dlh