Question

Dawson Company manufactures small table lamps and desk lamps. The following shows the activities per product and the total overhead information:

	Units	Setups	Inspections	Assembly (dlh)
Small table lamps	3,000	3,100	8,700	40,400
Desk lamps	8,000	6,200	14,500	40,400

Activity	Total Activity-Base Usage	Budgeted Activity Cost
Setups	9,300	$82,770
Inspections	23,200	141,520
Assembly (dlh)	70,700	247,450

The total factory overhead to be allocated to desk lamps is

a.$342,036

b.$199,521

c.$484,551

d.$285,030

Answer 1

Activity Rate
Activity	Total Overheads	Estimated Activity Level		Rate Per Activity
Setups	$                 82,770	9300		$                   8.90
Inspections	$             1,41,520	23200		$                   6.10
Assembly	$             2,47,450	70700		$                   3.50

Allocation of overhead to desk lamps
Activity	Rate Per Activity		Activity Level	Total Overhead
a	b		c	d=b*c
Setting up batches	$                   8.90		6,200	$               55,180.00
Processing of customer orders	$                   6.10		14,500	$               88,450.00
Assembling products	$                   3.50		40,400	$           1,41,400.00
Total				$           2,85,030.00

Correct Answer =d.$285,030