Question
Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH). FabricatingAssemblyOverhead cost$
Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH).
FabricatingAssemblyOverhead cost$ 300,000$ 200,000Direct labor hours75,000DLH125,000DLHMachine hours80,000MH62,500MH
Laval reports the following for one of its products, a desk lamp.
Number of UnitsFabricating DepartmentAssembly DepartmentDirect Labor Hours per UnitMachine Hours per UnitDirect Labor Hours per UnitMachine Hours per UnitDesk lamp4,0004DLH per unit3MH per unit2DLH per unit0.5MH per unit
Required:
1.Determine the plantwide overhead rate using 200,000 direct labor hours as the allocation base.
2.Determine the overhead cost per unit for the 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.Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.
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