Exercise 4-6 Assigning overhead costs using the plantwide rate and departmental rate methods LO P1, P2 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 31,000 desk lamps produced annually follows. Direct materials $ 275,000 Direct labor Fabricating department (8,000 DLH $29 per DLH) $ 232,000 Assembly department (16,200 DLH $25 per DLH) $ 405,000 Machine hours Fabricating department 15,000 MH Assembly department 20,250 MH Expected overhead cost and related data for the two production departments follow. Fabricating Assembly Direct labor hours 170,000 DLH 270,000 DLH Machine hours 161,000 MH 131,000 MH Overhead cost $ 330,000 $ 450,000

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.