Question

Smythe Co. makes furniture. The following data are taken from its production plans for the year. Direct labor costs Hazardous waste disposal costs $5,280,000 615,000 Expected production Direct labor hours required Hazardous waste disposed Chairs 211,000 units 262,000 DLH 200 pounds Tables 8,000 units 15,600 DLH 1,100 pounds Required: 1. Determine the hazardous waste disposal cost per unit for chairs and for tables if costs are assigned using a single plantwide overhead rate based on direct labor hours. Product Activity Driver OH S per direct Total Overhead Cost Units Produced OH Cost per unit Chairs Tables 2. Determine hazardous waste disposal costs per unit for chairs and for tables if costs are assigned based on the number of pounds disposed of. Product Activity Driver OH $ per pound Total Overhead Cost Units Produced OH Cost per unit Chairs Tables

Answer 1

Que 1:
Determination of hazardous waste disposal cost per. Unit for chair and table based on direct labour hours:
Product	Labour hour required	Ratio of labour hours	Hazardous waste disposal cost_A(based on DLH)	OH per DLH	Labour hour costs_B	Total OH cost(C=A+B)	Units produced_D	OH cost per unit(C/D)
Chair	262000	94.38040346	580439.4813	2.21541787	4983285.303	5563724.78	211000	26.36836
Table	15600	5.619596542	34560.51873	2.21541787	296714.6974	331275.216	8000	41.4094
Total	277600	100	615000		5280000	5895000	219000
Que 2:
Determination of hazardous waste disposal cost per. Unit for chair and table based on pounds disposed of:
Product	Labour hour required	Hazardous waste disposal in pounds	Hazardous waste disposal cost_A(based on pounds disposed)	OH per pound	Labour hour costs_B	Total OH cost(C=A+B)	Units produced_D	OH cost per unit(C/D)
Chair	262000	200	94615.38462	473.076923	4983285.303	5077900.69	211000	24.06588
Table	15600	1100	520384.6154	473.076923	296714.6974	817099.313	8000	102.1374
Total	277600	1300	615000		5280000	5895000	219000