Rain Maker Company uses a plantwide overhead rate with direct labor hours as the allocation base.Next year,350,000 units are expected to be produced taking .80 direct-labor hours each.How much overhead will be assigned to each unit produced given the following estimated amounts?
$$\begin{array} { l c c }
\text { Estimated: } & \text { Department 1 } & \text { Department } 2 \
\text { Manufacturing overhead costs } & \$ 2,730,000 & \$ 910,000 \
\text { Direct labor hours } & 168,000 \mathrm { D L H} & 112,000 \mathrm { DLH } \
\text { Machine hours } & 30,000 \mathrm { MH } & 7,000 \mathrm { MH }
\end{array}$$
A) $13.00 per unit
B) $10.40 per unit
C) $16.25 per unit
D) $6.50 per unit
E) $8.13 per unit

Question

Rain Maker Company uses a plantwide overhead rate with direct labor hours as the allocation base.Next year,350,000 units are expected to be produced taking .80 direct-labor hours each.How much overhead will be assigned to each unit produced given the following estimated amounts?
$$\begin{array} { l c c } 
\text { Estimated: } & \text { Department 1 } & \text { Department } 2 \
\text { Manufacturing overhead costs } & \$ 2,730,000 & \$ 910,000 \
\text { Direct labor hours } & 168,000  \mathrm { D L H} & 112,000 \mathrm { DLH } \
\text { Machine hours } & 30,000 \mathrm { MH } & 7,000 \mathrm { MH }
\end{array}$$
A) $13.00 per unit
B) $10.40 per unit
C) $16.25 per unit
D) $6.50 per unit
E) $8.13 per unit

Quizplus · Accepted Answer

The total estimated manufacturing overhead is $2,730,000 + $910,000 = $3,640,000. The total estimated direct labor hours are 168,000 + 112,000 = 280,000 DLH. The plantwide overhead rate is $3,640,000 / 280,000 DLH = $13 per DLH. Each unit requires 0.80 DLH, so the overhead assigned per unit is $13 * 0.80 = $10.40.

Rain Maker Company Uses a Plantwide Overhead Rate with Direct