The Delph Company produces two products...Blinks & Dinks. They are manufactured

Question

The Delph Company produces two products...Blinks & Dinks. They are manufactured in two departments... fabrication and assembly.

                                                   # of Units                   Labor Hrs/Unit            Machine Hrs/Unit

Blinks                                            1,000                                   4                                5

Dinks                                             2,000                                   2                                8

All the machine hours take place in the fabrication department, which has an estimated overhead of $84,500. All the labor hours take place in the assembly department, which has an estimated total overhead of $72,500.

They use a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?

Explanation / Answer

Total Lab Hrs = LH pu*Blink + LHpu*DLink = 4*1000+2*2000 = 8000 Total OHs = $84500+$72500 = $157,000 So OH rate = Total OH/Tota LHs = $157,000/8000 = $19.63 pu OH cost pu for Dlink = (4LH+5MH)*OH rate = 9*$19.63 = $176.67

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