Question

Knowledge Check 01 Helio Company has two products: A and B. The annual production and sales of Product A is 1,850 units and of Product B is 1,250 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labor-hours per unit and Product B requires 0.6 direct labor-hours per unit. The total estimated overhead for next period is $100,485. What is the company's predetermined overhead rate? Answer is complete but not entirely correct. Company's predetermined overhead rate $ 74 X

Answer 1

1) Estimated labor hour = (1850*.30+1250*.60) = 1305 Hour

Predetermine overhead rate = Estimated overhead/estimated hour = 100485/1305 = 77 per hour

2) Hand processing activity rate = 320000/100000 = 3.20 per labor hour

So answer is d) $3.20 per labor hour

3) Calculate unit product cost

Assembly (690*14.35)	9901.50
Processing orders (40*47.85)	1914
Inspection (70.30*10)	703
Total overhead	12518.50
Overhead cost per unit (12518.50/430)	29.11
Direct material	35.82
Direct labor	29.56
Unit product cost	94.49

4) The amount of overhead cost that will be allocated to each unit of product B = 66*.70 = 46.20