Western Company allocates $10.00 overhead to each unit produced. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2? Estimated: Department 1 Department 2 Manufacturing overhead costs $250,000 $150,000 Direct labor hours 8,000 DLH 12,000 DLH Machine hours 15,000 MH ? a. MH 33,000b. MH 137,500 c. MH 82,500 d. MH 25,000 MH

The correct option is D,25000 machine hours

Explanation:

Department 2 machine hours can be computed using the formula for plant-wide overhead rate, which is given below:

Plantwide overhead rate = Total  Manufacturing Overhead /Total Machine hours

Plantwide overhead rate is given as $10

Total manufacturing overhead=$250000+$150000

                                                   =$400000

$10=$400000/Total Machine Hours

by cross-multiplication

Total machine hours=$400000/$10

Total machine hours is 40000 hrs

Total machine hours=machine hrs in Dept 1+machine hrs in dept 2

40000=15000+machine hrs in dept 2

Machine hrs in dept 2=40000-15000

Machine hrs in dept =25000 hrs

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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