Answer:
a $17.44 per direct labor hour
b. Assignment of Overheads
Deluxe model =$43,600
Basic model = $104,640
Explanation:
Plant wide overhead rate is the allocation rate used for allocating overheads (indirect costs) to jobs or products calculated for the whole entity.
Plant wide overhead rate = Budgeted Overheads / Budgeted Activity.
<u>Calculation of Budgeted Overheads :</u>
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
Plant wide overhead rate = Budgeted Overheads / Budgeted Activity.
= $2,180,000/125,000
= $17.44 per direct labor hour
<u>Assignment of Overheads</u>
<u>Deluxe model required 2,500 direct labor hours</u>
Deluxe model = 2,500 × $17.44
= $43,600
<u>Basic model required 6,000 direct labor hours</u>
Basic model = 6,000 × $17.44
= $104,640