Exercise 4-10 (Essay) Discuss the appropriateness of the manufacturing overhead

Question

Exercise 4-10 (Essay) Discuss the appropriateness of the manufacturing overhead application base used in each of the following examples. Barlowe Manufacturing produces cell phone covers. The manufacturing process is highly automated, requiring very little human contact. The company uses direct labor hours as its manufacturing overhead application base. LINK TO TEXT LINK TO VIDEO Sky High Tumblers manufactures tumbling mats. Although part of the production process is automated, significant human effort is required to complete the mats. The company uses machine hours as its manufacturing overhead application base. LINK TO VIDEO LINK TO TEXT

Explanation / Answer

Barlowe Manufacturing uses direct labour hours as its manufacturing overhead application base which is not appropriate since its process is mostly automated with less human intervention so appropriate overhead application base would be machine hours instead of direct labour hours. Sky high tumblers uses machine hours as its manufacturing overhead application base which is not appropriate since its process involves significant human effort to complete the mats so appropriate overhead application base would be direct labour hours instead of machine hours.

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