Question

laval produces lamps and home lighting fixtures

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 34,000 desk lamps produced annually follows. $255,000 Direct materials Direct labor Fabricating department (8,000 DLH * $20 per DL) Assembly department (15,200 DLH * $27 per DLH) Machine hours Fabricating department Assembly department $160,000 $410, 400 14.200 MH 20. 150 MH Expected overhead cost and related data for the two production departments follow Direct labor hours Machine hours Overhead coat Fabricating 120,000 DLH 169,000 MH $380,000 Assembly 290,000 DLH 120,000 MH $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

Required 1 Total direct labor hours for both departments = $120,000 + 290,000 = $410,000 DLH Total overhead cost = $380,000 + 450,000 = $830,000 Plantwide overhead rate on the basis of direct labor hours = $830,000 / 410,000 = 2.02 per DLH Required 2 $ 2,55,000 Direct materials Direct Labor - Fabricating - Assembly Overhead (8,000 + 15,200) X 2.02 per DLH 1,60,000 4,10,400 46,864 Total manufacturing costs Units produced Manufacturing cost per unit (A) $ (B) (A)/(B) $ 8,72,264 34,000 25.65 Required 3 Departmental overhead rate 2.25 MH $ 1.55 DLH Fabricating Assembly Explanation:- Overhead rate of department Fabricating = Overhead cost of deparment/Total machine hours = $380,000/169,000 2.25 Assembly = Overhead cost of deparment/Total direct labor hours = $450,000/290,000 1.55

Required 4 $ 2,55,000 Direct materials Direct Labor - Fabricating - Assembly Applied overhead - Fabricating department (14,200 X $2.25) - Assembly department (20,150 X $1.55) Total manufacturing costs (A) Units produced (B) Manufacturing cost per unit (A) / (B) 1,60,000 4,10,400 46,864 $ 31,928.99 $ 31,267.24 $ 9,35,460 34,000 $ 27.51