Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made from components shaped in the fabricating department and assembled in the assembly department. Information related to the 22,000 desk lamps produced annually follows. Direct materials $ 270,000
Direct labor
Fabricating department (6,500 DLH × $29 per DLH) $ 188,500
Assembly department (15,200 DLH × $26 per DLH) $ 395,200
Machine hours
Fabricating department 15,000 MH
Assembly department 20,450 MH
Expected overhead cost and related data for the two production departments follow.
Fabricating Assembly
Direct labor hours 210,000 DLH 290,000 DLH
Machine hours 152,000 MH 124,000 MH
Overhead cost $ 390,000 $ 410,000
Required
1. Determine the plantwide overhead rate for Laval using direct labor hours as a base.
2. Determine the total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate.
3. Compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department.
4. Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.
Determine the plantwide overhead rate for Laval using direct labor hours as a base.
1.
Estimated overhead costs $800,000 $1.60 per direct labor hour
Estimated direct labor hours 500,000
2.
Determine the total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate.
Direct Labor - Assembly $188,500
Direct Labor - Fabricating 395,200
Direct materials 270,000
Overhead 34,720
Total manufacturing costs 888,420
Units produced
Manufacturing cost per unit
3.
Compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department. (Round your answers to 2 decimal places.)
Departmental overhead rate
Fabricating MH
Assembly DLH
4.
Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.
Direct materials
Direct labor
Fabricating
Assembly
0
Overhead
Fabricating
Assembly
0
$0
Units produced
Manufacturing cost
per unit 0 per unit