Asked by Marie Paulicia G. Christoph on Jun 03, 2024
Verified
If a desk lamp requires 1 hour of fabrication and 2 hours of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of desk lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is
A) $11.10
B) $4.91
C) $5.00
D) $7.20
Factory Overhead Allocated
The distribution of manufacturing indirect costs to products based on a predetermined rate or method.
Direct Labor Hours
The total hours worked by employees directly involved in the manufacturing process, often used to allocate labor costs to products.
Multiple Production
A manufacturing strategy involving the concurrent production of several items or product lines in a single facility.
- Calculate the factory's overhead rates employing both the unified plantwide method and the multi-departmental approach.
Verified Answer
ZK
Zybrea KnightJun 07, 2024
Final Answer :
A
Explanation :
The factory overhead rate for each department is calculated by dividing the total overhead by the total direct labor hours. For the Fabrication Department, it's $550,000 / 500,000 hours = $1.10 per hour. For the Assembly Department, it's $400,000 / 80,000 hours = $5.00 per hour. A desk lamp requires 1 hour of fabrication and 2 hours of assembly, so the overhead cost per desk lamp is (1 hour * $1.10) + (2 hours * $5.00) = $1.10 + $10.00 = $11.10.
Learning Objectives
- Calculate the factory's overhead rates employing both the unified plantwide method and the multi-departmental approach.