Question

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments—Fabrication and Assembly. Data for the products and departments are listed below. Product ​ Number of ​units Labor hrs per unit Machine hours per unit Rings 1,000 4 6 Dings 2,000 3 9 All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000. The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours. ​ What is the Fabrication Department overhead rate per machine hour?

Answer 1

Answer:

$3.75

Explanation:

The computation of the fabrication department overhead rate per machine hour is shown below:

But before that first determine the following calculations

The Total number of hours is

= 1,000 ×6 + 2,000 × 9

= 6,000 + 18,000

= 24,000

And, the total estimated overhead is $90,000

So, the overhead rate per machine hour for the fabrication department is

= $90,000 ÷ 24,000 hours

= $3.75