The Kaumajet Factory produces two products-table lamps and desk lamps. It has tw

Question

The Kaumajet Factory produces two products-table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $819,283, using 457,700 direct labor hours. The overhead budget for the Production Department is $357,944 using 80,800 direct labor hours.

If the budget estimates that a desk lamp will require 3 hours of finishing and 6 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 8,800 units are produced?

$173,141

$128,208

$38,984

$281,160

Explanation / Answer

Department rate of finishing dept = 819283/457700 = 1.79 per labour hour

Department rate of production dept = 357944/80800 = 4.43 per labour hour

Overhead cost :

so answer is d) $281160

Finishing depatment (8800*3*1.79) 47256 Production department (8800*6*4.43) 233904 Total Overhead cost $281160

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