Question

Answer following questions based on the scenario of Zany Brainy: Zany Brainy Corp. manufactures two types of lamps, Home size and Industry size lamps. Company produces 10,000 Home size lamps and 2,000 Industry size lamps. Following is the data provided about these two products: Total Home size Industry size lamp lamp I S10 $15 $16.00 $16.00 Direct materials per unit Direct manufacturing labour rate per unit Direct labour hours per unit 0.50 0.7 $110,000 200 50 Set up costs Lamps produced per patch Set up hour per patch Advertising costs Total indirect manufacturing costs 1 3 $150,000 $260,000 82% Search O 99+

Answer 1

Predetermined overhead rate = Total indirect manufacturing costs/Total direct manufacturing labor-hours

Total direct manufacturing labor-hours = (10000 x 0.50) + (2000 x 0.70) = 5000 + 1400 = 6400

Predetermined overhead rate = $260000/6400 = $40.625 per direct manufacturing labor-hour

	Home size lamp	Industry size lamp
Direct materials	10	15
Direct manufacturing labor	16	16
Indirect manufacturing costs	20.3125	28.4375
(0.50 x $40.625);(0.70 x $40.625)
Total product cost per unit $	46.3125	59.4375

Kindly round off as required since no rounding off instructions have been provided with the question. For any clarifications write under the comments section.