Question

Bond Company uses a plantwide overhead rate with direct labor hours as the allocation base. Use the following information to solve for the amount of direct labor hours estimated per unit of product G2.
direct material cost per unit of G2 $7
total estimated manufacturing overhead $795,000
total cost per unit of G2 $20
total estimated direct-labor hours 530,000
direct labor cost per unit of G2 $3.70


a) 1.5 DLH per unit of G2.
b) 6.2 DLH per unit of G2.
c) 9.3 DLH per unit of G2.
d) 0.66 DLH per unit of G2.
e) 14.09 DLH per unit of G2.

Answer 1

Answer:

B. 6.2 DLH per unit of G2

Explanation:

Total cost per unit of G2:

$20 = DM + DL + OH

$20 = $7 + $3.60 + X

$20= $10.6

$20- $10.6

= $9.4

X = $9.4 overhead per unit of G2

Therefore the Plantwide overhead rate is:

$795,000/530,000 DLH = $1.5 per DLH

DLH per unit of G2:

$9.4/$1.5 = 6.26 DLH per unit of G2