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Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH). Fabricating Assembly

Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH).

Fabricating Assembly
Overhead cost $ 512,000 $ 612,000
Direct labor hours 106,500 DLH 34,000 DLH
Machine hours 64,000 MH 75,500 MH

Laval reports the following for one of its products, a desk lamp.

Number of Units Fabricating Department Assembly Department
Direct Labor Hours per Unit Machine Hours per Unit Direct Labor Hours per Unit Machine Hours per Unit
Desk lamp 6,000 4 DLH per unit 2 MH per unit 3 DLH per unit 0.7 MH per unit

Required: 1. Determine the plantwide overhead rate using 140,500 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.

Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate.

Plantwide Overhead Rate Hours Used Overhead Cost per Unit
Desk lamp per direct labor hour DLHs

Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hours in the Assembly department.

What is the departmental overhead rate for the Fabricating Department?
What is the departmental overhead rate for the Assembly Department?

Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.

Department Departmental Overhead Rate Hours per Unit Overhead Cost per Unit
Fabricating
Assembly
Total $0

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