Spates, Inc., manufactures and sells two products: Product H2 and Product E0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The company's expected total manufacturing overhead is $266,468. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to:

A) $141.00 per unit
B) $123.42 per unit
C) $496.86 per unit
D) $1,453.44 per unit

Question

Spates, Inc., manufactures and sells two products: Product H2 and Product E0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

The company's expected total manufacturing overhead is $266,468. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to:

A) $141.00 per unit
B) $123.42 per unit
C) $496.86 per unit
D) $1,453.44 per unit

Sonali Dhingra · Accepted Answer

Final Answer : D, Explanation :  Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours= $266,468 ÷ 1,100 DLHs = $242.24 per DLH (rounded)Product H2: 6.0 DLHs × $242.24 per DLH = $1,453.44

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