Lavor 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 its implementation department. Information related to the 35,000 desk lamps produced annually follow.
Direct materials | $280,000 |
Direct labor |
|
Fabricating department (7,000 DLH × $20 per DLH) | $140,000 |
Implementation department (16,000 DLH × $29 per DLH) | $464,000 |
Machine hours |
|
Fabricating department | 15,040 MH |
Implementation department | 21,000 MH |
Expected overhead cost and related data for the two production departments follow.
| Fabricating | Implementation |
Direct labor hours | 75,000 DLH | 125,000 DLH |
Machine hours | 80,000 MH | 62,500 MH |
Overhead cost | $300,000 | $200,000 |
Required
1. Determine the plantwide overhead rate for Lavor 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 implementation department.
4. Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.
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