A company produces heating elements that go through two operations, casting and assembling, before they are complete.Expected costs and activities for the two departments are shown below.Given this information, the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.
$$\begin{array} { l c c }
& \text { Casting } & \text { Assembling } \
\text { Direct labor hours } & 1,875 \mathrm { DLH } & 7,500 \mathrm { DLH } \
\text { Machine hours } & 12,500 \mathrm { MH } & 3,750 \mathrm { MH } \
\text { Overhead costs } & \$ 75,000 & \$ 37,500
\end{array}$$

Question

A company produces heating elements that go through two operations, casting and assembling, before they are complete.Expected costs and activities for the two departments are shown below.Given this information, the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.
 $$\begin{array} { l c c } 
& \text { Casting } & \text { Assembling } \
\text { Direct labor hours } & 1,875 \mathrm { DLH } & 7,500 \mathrm { DLH } \
\text { Machine hours } & 12,500 \mathrm { MH } & 3,750 \mathrm { MH } \
\text { Overhead costs } & \$ 75,000 & \$ 37,500
\end{array}$$

Quizplus · Accepted Answer

The departmental overhead rate for the assembling department based on direct labor hours can be calculated by dividing the overhead costs of the assembling department by the direct labor hours of the assembling department.

Departmental overhead rate for assembling department = (Overhead costs for assembling department) / (Direct labor hours for assembling department) 
= $37,500 / 7,500 DLH 
= $5 per DLH

Therefore, the statement is true.

A Company Produces Heating Elements That Go Through Two Operations