Question

Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.

Product	Number of Units	Direct Labor Hours Per Unit	Machine Hours Per Unit
Blinks	1,171	4	6
Dinks	1,887	8	9

All of the machine hours take place in the Fabrication department, which has an estimated overhead of $106,700. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $82,100.

Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs based on direct labor hours. The factory overhead allocated per unit of Blinks is

a.$38.16

b.$21.50

c.$76.36

d.$328.42

Answer 1

Option A - $38.16

Explanation:

Total overheads = Overheads of fabrication department + Overheads of assembly department

= $106,700 + $82,100

= $188,800

Total labor hours = Blinks + Dinks

= (1,171units * 4) + (1,887units * 8)

= 19,780 hours

Overhead rate per hour = Total overhead / Total labor hours

= $188,800 / 19,780 hours

= $9.54 per hour

Total overhead cost for blinks = Total hours for blinks * Rate per hour

      = 4,684 * $9.54

= $44,685.36

Overhead cost per unit for Blinks = Total overhead cost for blinks / Total units

= $44,685.36 / 1,171units

= $38.16

Answer is Option A - $38.16