Question

Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made from components shaped in the fabricating department and assembled in the assembly department Information related to the 25,000 desk lamps produced annually follows $260,000 Direct materials Direct labor Fabricating department (8,000 DLH * $24 per DLH) Assembly department (15,200 DLH * $26 per DLH) Machine hours Fabricating department Assembly department $192,000 $395, 200 14.500 MH 20. 100 MH Expected overhead cost and related data for the two production departments follow Direct labor hours Machine hours Overhead cost Fabricating Assembly 210,000 DLH 265,000 DLH 168,000 MH 127,000 MH $340,000 $440,000 Required 1. Determine the plantwide overhead rate for Laval using direct labor hours as a base. 2. Determine the total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate.

Answer 1

Answer:

1 Overhead rate using Direct Labour hour base

=Overhead cost/Direct labour hour

Fabricating   = $340000/210000

=1.62 per Labour hour

Assembly =$440000/265000

=1.66 Per Labour Hour

2 Calulation of per unit Manufactuirng cost per unit   

Particulars	Amount	Amount
Direct Material (260000/25000)		10.4
Direct Labor
Fabricating Dept.(192000/25000)	7.68
Assembly Dept. ( 395200/25000)	15.808	23.488
Overhead - Fabricating	1.62
-Assembly	1.66	3.28
Total Manufacturing		37.168

3) Calculation of Department Overhead rate

based on Machine hour   Fabrication Dept. = Overhead /Machine hour

Fabrication dept =$340000/168000

=2.02 Per Machine Hour

Assembly Dept. =Overhead cost/Direct labour hour

   =440000/265000

=2.66 per Labour hour

4 Calculation of Total Manufacturing Cost

Particulars	$Amount	$total Amount
Direct Material		260000
Direct Labour
Fabrication Dept.	192000
Assembly Dept.	395200	587200
Overhead cost
Fabrication dept (14500MH*2.02)	29290
Assembly (15200LH*2.66)	40432	67722
Total		$914,922
Per unit cost (914922/25000)		36.60