Rain Maker Company uses a plantwide overhead rate with direct labor hours as the allocation base.Next year, 350,000 units are expected to be produced taking .80 direct-labor hours each.How much overhead will be assigned to each unit produced given the following estimated amounts? $$\begin{array} { l c c }
\text { Estimated: } & \text { Department 1 } & \text { Departnent } 2 \
\text { Marufacturing overhead costs } & \$ 2,730,000 & \$ 910,000 \
\text { Direct labor hours } & 168,000 D L H & 112,000 \mathrm { DLH } \
\text { Machine hours } & 30,000 \mathrm { MH } & 7,000 \mathrm { MH }
\end{array}$$
A)$13.00 per unit
B)$10.40 per unit
C)$16.25 per unit
D)$6.50 per unit
E)$8.13 per unit

Question

Rain Maker Company uses a plantwide overhead rate with direct labor hours as the allocation base.Next year, 350,000 units are expected to be produced taking .80 direct-labor hours each.How much overhead will be assigned to each unit produced given the following estimated amounts? $$\begin{array} { l c c } 
\text { Estimated: } & \text { Department 1 } & \text { Departnent } 2 \
\text { Marufacturing overhead costs } & \$ 2,730,000 & \$ 910,000 \
\text { Direct labor hours } & 168,000 D L H & 112,000 \mathrm { DLH } \
\text { Machine hours } & 30,000 \mathrm { MH } & 7,000 \mathrm { MH }
\end{array}$$
A)$13.00 per unit
B)$10.40 per unit
C)$16.25 per unit
D)$6.50 per unit
E)$8.13 per unit

Quizplus · Accepted Answer

The total estimated overhead is $2,730,000 + $910,000 = $3,640,000. Total direct labor hours are 168,000 + 112,000 = 280,000 DLH. The overhead rate is $3,640,000 / 280,000 DLH = $13 per DLH. Each unit takes 0.80 DLH, so overhead per unit is $13 * 0.80 = $10.40.

Rain Maker Company Uses a Plantwide Overhead Rate with Direct