The Aleutian Company produces two products—Rings and Dings; they are manufacture

Question

The Aleutian Company produces two products—Rings and Dings; they are manufactured in two departments—Fabrication and Assembly. Data for the products and departments are as follows. Rings: 1,000 units; 4 labor hours per unit; and 6 machine hours per unit. Dings: 2,000 units; 3 labor hours per unit; and 9 machine hours per unit. All of the machine hours take place in the Fabrication Department, which has an estimated total overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000. The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours. What is the overhead cost per unit for Rings?

a

$65.25

b

$23.25

c

$44.10

d

$64.50

a

$65.25

b

$23.25

c

$44.10

d

$64.50

Explanation / Answer

105000 90000 assembly fabrication Labor Hours Machine Hours Rings 1000 4 6 Dings 2000 3 9 Rings Total hours in departments 4000 6000 Dings Total hours in departments 6000 18000 Total 10000 24000 Cost per unit 10.5 3.75 total cost for rings per unit 42 22.5 64.5 Ans is d-$64.50

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