Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $550,000, using 500,000 direct labor hours. The factory overhead budget for the Assembly Department is $400,000, using 80,000 direct labor hours.
-If a table lamp requires 2 hours of fabrication and 1 hour of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of table lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is
A)$6.33
B)$4.91
C)$5.00
D)$7.20

Question

Quizplus · Accepted Answer

The overhead rate for the Fabrication Department is calculated as $550,000 / 500,000 hours = $1.10 per hour. The overhead rate for the Assembly Department is calculated as $400,000 / 80,000 hours = $5.00 per hour. For each table lamp, the overhead cost is (2 hours * $1.10) + (1 hour * $5.00) = $2.20 + $5.00 = $7.20.

Kaumajet Factory Produces Two Products: Table Lamps and Desk Lamps