Robert has been evaluating all costing data after he realized how small his margin for dinner plates had become. These plates have become the focal point for the organization so Robert has a vested interest in increasing the margin per plate. He has spent time aligning with beneficial suppliers and reducing his material cost and streamlined labor usage in a successful effort to minimize labor costs as well. The remaining task in this journey to improve margin is to evaluate the allocation of Manufacturing Overhead (MOH) costs that are estimated to be $563,559.00 for the year. Three main cost drivers and their related information are as follows:
How much of the MOH costs would be allocated to dinner plates if Robert chooses to continue using a single plant-wide rate based upon Direct Labor hours? (If required, round calculations to two decimal places.)
A) $122,533.70
B) $157,210.30
C) $206,430.12
D) $228,166.20

Question

Robert has been evaluating all costing data after he realized how small his margin for dinner plates had become. These plates have become the focal point for the organization so Robert has a vested interest in increasing the margin per plate. He has spent time aligning with beneficial suppliers and reducing his material cost and streamlined labor usage in a successful effort to minimize labor costs as well. The remaining task in this journey to improve margin is to evaluate the allocation of Manufacturing Overhead (MOH) costs that are estimated to be $563,559.00 for the year. Three main cost drivers and their related information are as follows:
 How much of the MOH costs would be allocated to dinner plates if Robert chooses to continue using a single plant-wide rate based upon Direct Labor hours? (If required, round calculations to two decimal places.)
A) $122,533.70 
B) $157,210.30 
C) $206,430.12 
D) $228,166.20

Quizplus · Accepted Answer

First, calculate the single plant-wide MOH rate. This can be done as follows: Total MOH costs/Budgeted direct labor hours: $563,559/35,990 = $15.66 per direct labor hour. Then, multiply the $15.66 per direct labor hour by the number of direct labor hours used in production of dinner plates: $15.66 × 14,570 hours = $228,166.20 (Choice D).

Robert Has Been Evaluating All Costing Data After He Realized