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Question - Nano Electronics Company produces two products, Resistors and Transistors in a small manufacturing plant which had total manufacturing overhead of $21,000 in June and used 300 direct labor hours. The factory has two departments, Design, which incurred $10,000 of manufacturing overhead, and Production which incurred $11,000 of manufacturing overhead. Design used 200 hours of direct labor and Production used 80 machine hours.
During June, 150 direct labor hours were used in making 100 units of Resistors, and 150 direct labor hours were used in making 100 units of Transmitters.
If Nano Electronics Company uses a plantwide rate based on direct labor hours to assign manufacturing costs to products, the total manufacturing overhead assigned to each unit of Resistors and Transistors in June were:
Resistors:
Transistors:
Is a plant wide rate the best way to allocate overhead plant rates? Why or why not?
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