A company allocates $7.50 overhead to each unit produced.The company uses a plantwide overhead rate with direct labor hours as the allocation base.Given the amounts below,how many direct labor hours does the company expect in department 2?
$$\begin{array} { l c c }
\text { Estirnated: } & \text { Department 1 } & \text { Department } 2 \
\text { Manufacturing overhead costs } & \$ 74,358 & \$ 49,572 \
\text { Direct labor hours } & 6,610 \mathrm { DLH } & ? \mathrm { DLH } \
\text { Machine hours } & 700 \mathrm { MH } & \mathbf { 8 0 \mathrm { MH } }
\end{array}$$
A) 9,914 DLH
B) 6,612 DLH
C) 3,109 DLH
D) 7,454 DLH
E) 16,254 DLH

Question

A company allocates $7.50 overhead to each unit produced.The company uses a plantwide overhead rate with direct labor hours as the allocation base.Given the amounts below,how many direct labor hours does the company expect in department 2?
$$\begin{array} { l c c } 
\text { Estirnated: } & \text { Department 1 } & \text { Department } 2 \
\text { Manufacturing overhead costs } & \$ 74,358 & \$ 49,572 \
\text { Direct labor hours } & 6,610 \mathrm { DLH } & ? \mathrm { DLH } \
\text { Machine hours } & 700 \mathrm { MH } & \mathbf { 8 0 \mathrm { MH } }
\end{array}$$
A) 9,914 DLH
B) 6,612 DLH
C) 3,109 DLH
D) 7,454 DLH
E) 16,254 DLH

Quizplus · Accepted Answer

The total estimated manufacturing overhead costs are $74,358 + $49,572 = $123,930. The company allocates $7.50 overhead to each unit produced, so the total number of units produced is $123,930 / $7.50 = 16,524 units. The company uses direct labor hours as the allocation base, so the total number of direct labor hours is 16,524 units * 6,610 DLH / unit = 109,202 DLH. The company expects 109,202 DLH - 6,610 DLH = 102,592 DLH in department 2.

A Company Allocates $7 A) 9,914 DLH B) 6,612 DLH C) 3,109 DLH D)

A Company Allocates $7 A) 9,914 DLH
B) 6,612 DLH
C) 3,109 DLH
D)