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 28,000 desk lamps produced annually follows.

Direct materials	$	270,000
Direct labor
Fabricating department (6,500 DLH × $25 per DLH)	$	162,500
Assembly department (15,800 DLH × $26 per DLH)	$	410,800
Machine hours
Fabricating department		14,800	MH
Assembly department		20,450	MH

  
Expected overhead cost and related data for the two production departments follow.

	Fabricating			Assembly
Direct labor hours		140,000	DLH		285,000	DLH
Machine hours		173,000	MH		123,000	MH
Overhead cost	$	380,000		$	430,000

  
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

Solution f. Total direct Labor hours for both departments = 140000 + 285000 = 425000 Total overhead Cost = 380000 + 430000 = 810000 plantwide overhead rate on the basis of darect Labor hours 810000 / 425000 = 1.90 Dear DLH

2) 270000 Computation of marfacturing Cost per unit particulars Amount Total manufacturing cost: Direct Material Derect Labor: fabricating department 162500 Assembly department 410800 Applied overhead [C6500 +15800) X1090] 42370 Total manufacturing cost 885670 Total desk Lamp produced 28000 Manufacturing Cost per unit 31.63 particulars fabricating Assembly 380000 430000 overhead cost of department Allocation base Total Machine hours Total direct Labor hours overhead vrate of department 173000 285000 2019 1.50

270000 162500 410800 Total Manufacturing cost : Direct Material Direct Labor: Fabricating blepacetiment Assembly department Appleed overhead: fabrecating department [14800 X2:19] Assembly department (20450X1-50] Total manufacturing cost Total desk Lamp produced i manufacturing cost per unit 32412 30675 906387 28000 32.37