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