Answer:
1. Estimated overhead rate on Plant level $ 1.614 per hour
2. Total manufacturing cost per unit $ 33.27 per unit
3. Overhead rate -Fabricating Department based on MH $ 2.16 per MH
Overhead rate for Assembly Department on DLH $ 1.54 per DLH
4. Total manufacturing cost on departmental rates $ 34.03 per unit
Explanation:
Computation of overhead rate on plantwise basis
Plantwise overhead costs are to be determined on direct labor hours
Estimated overhead cost - Fabricating $ 360,000
Estimated overhead cost - Assembly <u>$ 455,000</u>
Total Plantwise estimated overhead cost $ 815,000
Direct Labor Hours - Fabricating 210,000 hours
Direct Labor hours - Assembly <u> 295,000 </u>hours
Total Direct Labor hours - Plant 505,000 hours
Estimated overhead rate on Plant level $ 1.614 per hour
Computation of total manufacturing cost per unit
Direct Materials $ 265,000
Direct Labor
Fabricating = ( 6,500 DLH * $ 26 per hour) $ 169,000
Assembly = ( 15,800 DLH * $ 35 per hour) <u>$ 395,000</u>
Total Direct Labor Cost $ 564,000
Total Overhead cost on basis of DLH
Fabricating 6,500+Assembly 15.800=22,300 hours at $ 1.614 <u>$ 35,992</u>
Total manufacturing cost $ 864,992
No of units produced 26,000
Total manufacturing cost per unit ( $ 864,992/26,000) $ 33.27 per unit
Computation of departmental overhead rates
<u>Fabricating Department</u>
Estimated overhead cost - Fabricating $ 360,000
Estimated Machine Hours - Fabricating 167,000 hours
Overhead rate for Fabricating Department based on MH $ 2.16 per MH
<u>Assembly Department</u>
Estimated overhead cost - Assembly $ 455,000
Direct Labor hours - Assembly <u> 295,000 </u>hours
Overhead rate for Assembly Department on DLH $ 1.54 per DLH
Computation of manufacturing cost per unit using Departmental rates
Direct Materials $ 265,000
Direct Labor
Fabricating = ( 6,500 DLH * $ 26 per hour) $ 169,000
Assembly = ( 15,800 DLH * $ 35 per hour) <u>$ 395,000</u>
Total Direct Labor Cost $ 564,000
Total Overhead cost
Fabricating 14,500 MH at $ 2.16 per MH $ 31,320
Assembly 15.800 DLH at $ 1.54 per DLH <u>$ 24.332</u>
Total manufacturing cost on departmental OH rates $ 55,652
Total manufacturing cost $ 884,652
No of units produced 26,000
Total manufacturing cost per unit ( $ 884,652/26,000) $ 34.03 per unit