The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?
A) $77.00
B) $39.00
C) $19.50
D) $59.92

Question

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.  All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?
A) $77.00 
B) $39.00 
C) $19.50 
D) $59.92

Quizplus · Accepted Answer

To calculate the overhead cost per unit for Dinks, we need to determine the total overhead cost and the total number of labor hours for Dinks.

Total overhead cost = Fabrication department overhead + Assembly department overhead
Total overhead cost = $84,000 + $72,000
Total overhead cost = $156,000

Total labor hours for Dinks = 9,000 hours

Therefore, overhead cost per unit for Dinks = Total overhead cost / Total number of units of Dinks
Overhead cost per unit for Dinks = $156,000 / 4,000 units of Dinks
Overhead cost per unit for Dinks = $39.00

Hence, the answer is B) $39.00.

The Ramapo Company Produces Two Products, Blinks and Dinks