Spates, Inc., manufactures and sells two products: Product H2 and Product E0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The company's expected total manufacturing overhead is $266,468. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to:
A)$141.00 per unit
B)$123.42 per unit
C)$496.86 per unit
D)$1,453.44 per unit

Question

Spates, Inc., manufactures and sells two products: Product H2 and Product E0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  The company's expected total manufacturing overhead is $266,468. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to:
A)$141.00 per unit 
B)$123.42 per unit 
C)$496.86 per unit 
D)$1,453.44 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $266,468 ÷ 1,100 DLHs = $242.24 per DLH (rounded)
Product H2: 6.0 DLHs × $242.24 per DLH = $1,453.44