Question

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 33,000 desk lamps produced annually follows. $275,000 Direct materials Direct labor Fabricating department (8,000 DLH X $34 per DLH) Assembly department (16,400 DLH X $25 per DLH) Machine hours Fabricating department Assembly department $ 272,000 $410,000 14,900 MH 21,150 MH Expected overhead cost and related data for the two production departments follow. Direct labor hours Machine hours Overhead cost FabricatingA ssembly 160,000 DLH 375,000 DLH 158,000 MH 128,000 MH $360,000 $420,000 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 E assembly department. 4. Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk E lamps.

Answer 1

1) Plantwide overhead rate = (360000+420000)/535000 = 1.46 per hour

2) Total manufacturing cost per unit

	Aluminum Desk Lamp
Direct material	275000
Direct labor (272000+410000)	682000
Overhead (24400*1.46)	35624
Total Cost	992624
Unit	33000
Overhead cost per unit	30.08

3) Departmental rate:

Fabricating department = 360000/158000 = 2.28 per MH

Assembly department = 420000/375000 = 1.12 per DLH

4) Total manufacturing cost per unit

	Aluminum Desk Lamp
Direct material	275000
Direct labor (272000+410000)	682000
Fabricating department (14900*2.28)	33972
Assembly Department (16400*1.12)	18368
Total Cost	1009340
Unit	33000
Overhead cost per unit	30.59