Kamper Company sells two products Big Z and Little Z. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $475,000. The direct labor and direct materials costs are estimated to be consistent with the current year.

Direct labor costs $20 per hour and the company expects to manufacture 32,000 units of Big Z and 9,000 units of Little Z next year. What are total estimated direct labor hours for this next year?
A) 30,800 total DLH.
B) 616,000 total DLH.
C) 300,000 total DLH.
D) 1,025,000 total DLH.
E) 916,000 total DLH.

Question

Kamper Company sells two products Big Z and Little Z. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $475,000. The direct labor and direct materials costs are estimated to be consistent with the current year.

Direct labor costs $20 per hour and the company expects to manufacture 32,000 units of Big Z and 9,000 units of Little Z next year.

What are total estimated direct labor hours for this next year?

Direct labor costs $20 per hour and the company expects to manufacture 32,000 units of Big Z and 9,000 units of Little Z next year.  What are total estimated direct labor hours for this next year?
A) 30,800 total DLH. 
B) 616,000 total DLH. 
C) 300,000 total DLH. 
D) 1,025,000 total DLH. 
E) 916,000 total DLH.

Quizplus · Accepted Answer

$17/$20 = .85 DLH per unit of Big Z
$8/$20 = .4 DLH per unit of Little Z
.85 DLH × 32,000 units of Big Z + .4 DLH × 9,000 units of Little Z = 30,800 total DLH

Kamper Company Sells Two Products Big Z and Little Z