Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $322,740, using 326,000 direct labor hours. The factory overhead budget for the Assembly Department is $478,980, using 54,000 direct labor hours.
If a desk lamp requires 2 hour of fabrication and 5 hours of assembly, the total amount of factory overhead that Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours if 10,400 units are produced is
a.$154,400
b.$153,593
c.$92,248
d.$481,832
Solution:
Computation of Departmental overhead rate for Each department | ||
Particulars | Fabrication | Assembly |
Budgeted Factory Overhead | $3,22,740 | $4,78,980 |
/Budgeted direct labor hours | 326000 | 54000 |
Departmental Overhead rate | $0.99 | $8.87 |
Computation of Overhead allocated to 10400 units of desk lamps | ||
Fabrication | Assembly | |
Total Hours required (10400*2) and (10400*5) | 20800 | 52000 |
*Departmental Overhead rate | $0.99 | $8.87 |
Manufacturing overhead allocated | $20,592 | $4,61,240 |
Total Factory Overhead Allocated to desk lamps | $4,81,832 |
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