Question

Exercise 4-4 Plantwide overhead rate LO P1

Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2017 follow.

	Molding			Trimming
Direct labor hours		43,000	DLH		52,000	DLH
Machine hours		32,000	MH		4,700	MH
Overhead costs	$	730,000		$	550,000

  
Data for two special order parts to be manufactured by the company in 2017 follow.

	Part A27C			Part X82B
Number of units		10,200	units		55,500	units
Machine hours
Molding		5,300	MH		1,060	MH
Trimming		3,200	MH		800	MH
Direct labor hours
Molding		3,500	DLH		3,300	DLH
Trimming		1,100	DLH		5,500	DLH

Required
1. Compute the plantwide overhead rate using direct labor hours as the base.
2. Determine the overhead cost assigned to each product line using the plantwide rate computed in requirement 1.

Compute the plantwide overhead rate using direct labor hours as the base.

Determine the overhead cost assigned to each product line using the plantwide rate computed in requirement 1. (Round "OH rate" to 2 decimal places.)

	Part Activity Driver Plantwide OH rate Total Overhead Cost A27C X82B

Answer 1