Question

Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion Exercise 17-10 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 23,000 desk lamps produced annually follows. $260,000 Direct materials Direct labor Fabricating department (9,500 DLH * $22 per DLR) Assembly department (15,400 DLH $25 per DL) Machine hours Fabricating department Assembly department $209,000 $385,000 20,450 MH Expected overhead cost and related data for the two production departments follow. Direct labor hours Machine hours Overhead cost FabricatingAssembly 140,000 DL 265,000 DLH 15), 000 121.000 $400,000 $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.

Answer 1

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Laval
Answer 1
Calculation of single plant wide OH Rate	Fabricating	Assembly	Total	Note
Direct Labor Hours	140,000.00	265,000.00	405,000.00	A
Total Overhead costs	400,000.00	450,000.00	850,000.00	B
Predetermined OH Rate			2.10	C=B/A
Workings for Answer 2
Overhead applied to aluminum desk lamp	Fabricating	Assembly	Total	Note
Direct Labor Hours	9,500.00	15,400.00	24,900.00	D
Predetermined OH Rate			2.10	See C
Overhead applied to aluminum desk lamp			52,259.26	E=C*D
Answer 2
Manufacturing cost	Fabricating	Assembly	Total	Note
Direct materials			260,000.00
Direct Labor	209,000.00	385,000.00	594,000.00
Overhead applied			52,259.26	See E
Manufacturing cost			906,259.26	F
Units produced			23,000.00	G
Manufacturing cost per unit			39.40	H=F/G
Answer 3
Calculation of department wise OH Rate	Fabricating	Assembly	Total	Note
Machine Hours/ Labor Hours	153,000.00	265,000.00	418,000.00	I
Total Overhead costs	400,000.00	450,000.00	850,000.00	See B
Predetermined OH Rate	2.61	1.70		J=B/I
Workings for Answer 4
Overhead applied to aluminum desk lamp	Fabricating	Assembly	Total	Note
Machine Hours/ Labor Hours	14,200.00	15,400.00	29,600.00	K
Predetermined OH Rate	2.61	1.70		See J
Overhead applied to aluminum desk lamp	37,124.18	26,150.94	63,275.13	L=K*J
Answer 4
Manufacturing cost	Fabricating	Assembly	Total	Note
Direct materials			260,000.00
Direct Labor	209,000.00	385,000.00	594,000.00
Overhead applied			63,275.13	See L
Manufacturing cost			917,275.13	M
Units produced			23,000.00	See G
Manufacturing cost per unit			39.88	N=M/G