Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made fro

Question

3 years ago

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Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made fro

m components shaped in the fabricating department and assembled in the assembly department. Information related to the 21,000 desk lamps produced annually follows
Direct materials $270,000
Direct labor
Fabricating department (6,500 DLH × $29 per DLH) $188,500
Assembly department (15,200 DLH × $26 per DLH) $395,200
Machine hours
Fabricating department 15,000 MH
Assembly department 20,450 MH

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

Fabricating Assembly
Direct labor hours 210,000 DLH 290,000 DLH
Machine hours 152,000 MH 124,000 MH
Overhead cost $390,000 $410,000

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.

Business

1 answer:

12345 [234] · Answer 1 · 2022-01-05T12:29:16+03:00

Answer:

Part 1.

Plantwide overhead rate for Laval using direct labor hours as a base. is $1.60 per Direct Labor Hour

Part 2.

Total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate is $78.76

Part 3. Compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department.

Fabricating Assembly

Overheads (R) 390000 410000

Department Cost Driver 152000 290000

Overhead Rate 2.57 1.41

Therefore Overhead Rates are :

Fabricating Department $ 2.57 per Machine Hour

Assembly Department $1.41 per Labor Hour

Part 4. Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.

Direct materials ($270000/21000) 12.86

Direct labor:

Fabricating department(6500/21000×$29) 8.98

Assembly department(15200/21000×$26) 18.82

Overheads:

Fabricating department(152000/21000×$2.57) 18.60

Assembly department (290000/21000×$1.41) 19.47

Total manufacturing cost per unit 78.73

Explanation:

Part 1. Plantwide overhead rate for Laval using direct labor hours as a base.

Overhead Rate = Total Overheads/Total Direct Labor Hours

= $1.60 per Direct Labor Hour

Fabricating Assembly Total

Overheads (R) 390000 410000 800000

Direct Labor Hrs 210000 290000 500000

Overhead Rate 1.60

Part 2. Total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate