Escuha Company produces two type of calculators: scientific and business Both pr
ID: 2456618 • Letter: E
Question
Escuha Company produces two type of calculators: scientific and business Both products pass through two producing departments. The business calculator is by far the most popular The following data have been gathered for these two products: Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours. Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Repeat using direct labor hours for Department 1 and machine hours for Department 2.Explanation / Answer
1 The overhead cost per unit for each product using a plantwide, unit-based rate using direct labour hours:
Total O/H cost of Plant = $ 1650000
total Direct Lobor Hours of plant = 110000 hrs
O/H of plant per DLH = $1.5
Direct Labor hours / unit of each product = 1.34 hrs.
O/H per unit for each product = 1.34 * $1.5 = $2
2) => the overhead cost per unit for each product using departmental rates (machine hours for Department 1 and direct labor hours for Department 2) =
Department 1 = Machine rate = $ 2 / hour Depart 2 = Direct Labor hour rate = $ 0.8767 / hour
each product O/h cost /unit of Depart1 = 50/75 * $2 each product O/h cost /unit of Depart2 = 100/75 = $1.33 /unit *$0.8767 = $1.168 /unit
Total O/H cost of each product of plant =( $1.33 + $1.168) = $2.49 / unit
=> the overhead cost per unit for each product using departmental rates (direct labor hours for Department 1 and machine hours for Department 2) =
Department 1 = Direct Labor hour = $ 4.53 / hour Depart 2 = Machine rate = $ 6.40 / hour
each product O/h cost /unit of Depart1 = 100/75 * $4.53 each product O/h cost /unit of Depart2 = 50/75 = $6.04 /unit *$6.40 = $4.26 /unit
Total O/H cost of each product of plant =( $6.04 + $4.26) = $10.30 / unit
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.