Question
Departmental Overhead Rates Lansing, Inc., provided the following data for its two producing departments: Molding Polishing Total Estimated overhead $400,000 $80,000 $480,000 Direct labor hours
Departmental Overhead Rates
Lansing, Inc., provided the following data for its two producing departments:
Molding | Polishing | Total | ||||
Estimated overhead | $400,000 | $80,000 | $480,000 | |||
Direct labor hours (expected and actual): | ||||||
Form A | 1,000 | 5,000 | 6,000 | |||
Form B | 4,000 | 15,000 | 19,000 | |||
Total | 5,000 | 20,000 | 25,000 | |||
Machine hours: | ||||||
Form A | 3,500 | 3,000 | 6,500 | |||
Form B | 1,500 | 2,000 | 3,500 | |||
Total | 5,000 | 5,000 | 10,000 |
Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B.
Required:
1. Calculate the overhead rates for each department.
Molding | $fill in the blank 1 per machine hour |
Polishing | $fill in the blank 2 per direct labor hour |
2. Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. Round your answers to the nearest cent.
Unit Overhead Cost | |
Assigned unit overhead cost for Form A | $fill in the blank 3 per unit |
Assigned unit overhead cost for Form B | $fill in the blank 4 per unit |
How does this compare with the plantwide rate unit cost, using direct labor hours? Relative to the plantwide rate, the cost increased for Form A and decreased for Form B.
3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates. Round your answers to the nearest cent.
Unit Overhead Cost | |
Form A | $fill in the blank 7 per unit |
Form B | $fill in the blank 8 per unit |
Compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
Relative to the plantwide rate, the cost decreased for Form A and increased for Form B.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started