Question

Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made from components shaped in the fabricating department and assembled in the assembly department. Information related to the 26,000 desk lamps produced annually follows.

Direct materials	$	275,000
Direct labor
Fabricating department (8,000 DLH × $32 per DLH)	$	256,000
Assembly department (16,000 DLH × $20 per DLH)	$	320,000
Machine hours
Fabricating department		14,500	MH
Assembly department		20,450	MH

  
Expected overhead cost and related data for the two production departments follow.

	Fabricating			Assembly
Direct labor hours		190,000	DLH		250,000	DLH
Machine hours		156,000	MH		129,000	MH
Overhead cost	$	390,000		$	425,000

  
Required
1. Determine the plantwide overhead rate for Laval using direct labor hours as a base.
2. Determine the total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate.
3. Compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department.
4. Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.

Answer 1