Compute the plantwide overhead rate using direct labor hours

Reference no: EM131989457

Problem

Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2015 follow.

	Molding				Trimming
Direct labor hours			45,000	DLH			48,000	DLH
Machine hours			36,000	MH			4,200	MH
Overhead costs		$	740,000			$	600,000

Data for two special order parts to be manufactured by the company in 2015 follow

Required

	Part A27C			Part X82B
Number of units		10,200	units		55,000	units
Machine hours
Molding		5,600	MH		1,120	MH
Trimming		3,000	MH		750	MH
Direct labor hours
Molding		3,500	DLH		2,550	DLH
Trimming		500	DLH		2,500	DLH

1. Compute the plantwide overhead rate using direct labor hours as the base.

2. Determine the overhead cost assigned to each product line using the plantwide rate computed in requirement 1.

Reference no: EM131989457

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