Answer and Explanation:
The computation is shown below:
1. Plant wide overhead rate = Budgeted Overheads ÷ Budgeted Activity.
where,
Budgeted Overheads :
Handling materials 625,000
Inspecting product 900,000
Processing purchase orders 105,000
Paying suppliers 175,000
Insuring the factory 300,000
Designing packaging 75,000
Total Cost 2,180,000
And, the budgeted activity is 125,000
So, Plant wide overhead rate is
= Budgeted Overheads ÷ Budgeted Activity.
= $2,180,000/125,000
= $17.44 per direct labor hour
Now Assignment of Overheads
As Deluxe model required 2,500 direct labor hours
So, Deluxe model = 2,500 × $17.44
= $43,600
As Basic model required 6,000 direct labor hours
So, Basic model = 6,000 × $17.44
= $104,640
