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 desk lamp requires 1 hour of fabrication and 2 hours of assembly, the total amount of factory overhead that Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours if 26,000 units are produced is
A)$540,000
B)$187,200
C)$475,000
D)$288,600

Question

Quizplus · Accepted Answer

The factory overhead rate for each department is calculated first. 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 lamp is $1.10 + $5.00*2 = $11.10. For 26,000 units, the total overhead is 26,000 * $11.10 = $288,600.

Kaumajet Factory Produces Two Products: Table Lamps and Desk Lamps