Reference no: EM132488687
Question - Assigning overhead costs using the plantwide rate and departmental rate methods
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.
Direct materials $270,000
Direct labor
Fabricating department (6,500 DLH x $20 per DLH) $130,000
Assembly department (16,000 DLH * $22 per DLH) $352,000
Machine hours
Fabricating department 15,200 MH
Assembly department 20,850 MH
Expected overhead cost and related data for the two production departments follow.
|
|
Fabricating
|
Assembly
|
|
Direct labor hours
|
210,000 DLH
|
280,000 DLH
|
|
Machine hours
|
168,000 MH
|
134,000 MH
|
|
Overhead cost
|
$320,000
|
$435,000
|
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.