Question

Smythe Co. makes furniture. The following data are taken from its production plans for the year. Direct labor costs Hazardous waste disposal costs $5,620,000 630,000 Expected production Direct labor hours required Hazardous waste disposed Chairs 207,000 units 256,000 DLH 400 pounds Tables 14,000 units 16,000 DLH 500 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 labor hour 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.

Answer 1

Answer

Hazardous Waste Disposal Costs	$630,000	$                           2.32	per direct labor hours
No. of DLHs	272,000
Product:	Activity Driver	OH $ per DLH	Total Overhead Costs	Units Produced	OH Cost per unit
Chairs	256,000	2.32	$593,920	207,000	$                             2.87
Tables	16,000	2.32	$37,120	14,000	$                             2.65
Hazardous Waste Disposal Costs	$630,000	$                      700.00	per pound disposed off
No. of pound disposed of	900
Product:	Activity Driver	OH $ per DLH	Total Overhead Costs	Units Produced	OH Cost per unit
Chairs	400	$                      700.00	$280,000	207,000	$                             1.35
Tables	500	$                      700.00	$350,000	14,000	$                           25.00