Question

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Labor Hours Per Unit Machine Hours Per Unit Blinks 1,178 2 5 Dinks 2,060 3 6 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $108,300. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $87,800. The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Blinks

Answer 1

Answer:

Allocated MOH per unit= $45.94

Explanation:

Giving the following information:

Product Number of Units Labor Hours Per Unit

Blinks 1,178 2  

Dinks 2,060 3

Estimated overhead costs for the period= 108,300 + 87,800= $196,100

Total direct labor hours= (1,178*2) + (2,060*3)= 8,536

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 196,100 / 8,536

Predetermined manufacturing overhead rate= $22.97 per direct labor hour

Now, we allocate overhead to Blinks:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 22.97*2= $45.94