Exercise 4-6 (Algo) Computing departmental overhead rates LO P2

Hydro Sports budgets overhead cost of $576,000 for the year; of this amount, $324,000 is traceable to the Assembly department and $252,000 is traceable to the Finishing department. The company manufactures two types of jet skis: standard and deluxe. Budgeted direct labor hours for the standard model are 8 in Assembly and 2 in Finishing. Budgeted direct labor hours for the deluxe model are 10 in Assembly and 4 in Finishing. The company budgets production of 120 units of the standard model and 120 units of the deluxe model for the year. 1. Compute each departments total number of budgeted direct labor hours for the year. 2. Compute departmental overhead rates for each department using direct labor hours for that department. 3. Compute overhead cost per unit for each model using departmental overhead rates. Actual direct labor hours for the standard model are 8 in Assembly and 2 in Finishing. Actual direct labor hours for the deluxe model are 10 in Assembly and 4 in Finishing.

Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Required 3

Compute each departments total number of budgeted direct labor hours for the year.

	Number of Units	Assembly Department		Finishing Department
		DLHs per Unit	Total Hours	DLHs per Unit	Total Hours
Standard
Deluxe
Totals

Compute departmental overhead rates for each department using direct labor hours for that department.

Compute a departmental overhead rate for the Assembly department.
		Departmental OH rate
Compute a departmental overhead rate for the Finishing department.
		Departmental OH rate

Compute overhead cost per unit for each model using departmental overhead rates. Actual direct labor hours for the standard model are 8 in Assembly and 2 in Finishing. Actual direct labor hours for the deluxe model are 10 in Assembly and 4 in Finishing.

Department	Departmental Overhead Rate		Standard		Deluxe
			Hours per Unit	Overhead Allocated	Hours per Unit	Overhead Allocated
Assembly
Finishing
Totals