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Nikolay [14]
3 years ago
5

Red Raider Company uses a plantwide overhead rate with direct labor hours as the allocation base. Next year, 560,000 units are e

xpected to be produced requiring 0.90 direct-labor hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?
Estimated: Department 1 Department 2
Manufacturing overhead costs   $2,530,000  $900,000
Direct labor hours 168,000 DLH 110,000 DLH
Machine hours 30,000 MH   8,000 MH

a. $12.34 per unit
b. $63.95 per unit
c. $7.32 per unit
d. $11.11 per unit
e. $15.06 per unit
Business
1 answer:
andrew11 [14]3 years ago
7 0

Answer:

d. $11.11 per unit

Explanation:

Plant wide overhead rate = Total manufacturing cotsts / Total direct labor hours

Plant wide overhead rate = ($2,530,000 + $900,000) / (168,000+110,000)

Plant wide overhead rate = $3,430,000 / 278,000

Plant wide overhead rate = $12.34 per DLH

Overhead cost per unit = Plant wide overhead rate * Direct hours per unit

Overhead cost per unit = $12.34 * 0.90

Overhead cost per unit = $11.11 per unit

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Given information:

The fixed operating costs are$430,000.

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Calculation of the break-even point:

The formula to calculate the break-even point is:  

Break-even point = Fixed costs / Selling price per unit -Variable costs per unit  

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