Question

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 45,000 DLH 48,000 DLH Machine hours 37,500 MH 3,500 MH Overhead costs $ 740,000 $ 610,000 Data for two special order parts to be manufactured by the company in 2017 follow. Part A27C Part X82B Number of units 9,800 units 51,500 units Machine hours Molding 6,200 MH 1,240 MH Trimming 2,400 MH 600 MH Direct labor hours Molding 4,000 DLH 2,150 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.

Answer 1

Answer:

1. $14,52 per direct labor hour

2. Overheads Assigned

Part A27C = $89,367

Part X82B =$95,832

Explanation:

The plantwide overhead rate is the absorption rate calculated on the entity`s to total overheads and total activity.

plantwide overhead rate = Budgeted Overheads / Budgeted Activity

                                         = ($ 740,000 + $ 610,000) / (45,000+48,000)

                                         =  $14,52 per direct labor hour

Part A27C

Molding department  (4,000× $14,52)    =  $58,080

Trimming department(2,150× $14,52)     =  $31,287

Total                                                          =  $89,367

Part X82B

Molding department (1,100× $14,52)      =  $ 15,972

Trimming department (5,500× $14,52)  =  $79,860

Total                                                         =  $95832