Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direc

Question

Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct materlal and direct labor costs are detalled below. Next year the company wishes to use a plantwide overhead rate with direct labor hours as Its allocation base. Next year's overhead is estimated to be $350,640. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 42,000 units of CC1 and 111,000 units of CC2 next year. Direct Material per Unit $39.10 $27.20 Direct Labor Dollars per Unit $1A) $14.40 CX Compute the plantwide overhead rate for next year O $1.96 per DLH O $3.00 per DLH O $32.00 per DLH. O $20.00 per DLH. O $0.96 per DLH

Explanation / Answer

Labour hour in CC1 = 17.60/20 = 0.88 labour hour per unit

Labour hour in CC2 = 14.40/20 = 0.72 labour hour per unit

Estimated labour hour = (42000*.88+111000*.72) = 116880 labour hour

Estimated overhead cost = 350640

Overhead rate = 350640/116880 = 3 per labour hour

so answer is b) $3.00 per DLH

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