Question

Spates, Inc., manufactures and sells two products: Product H2 and Product E0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

	Expected Production	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product H2	130	6.3	819
Product E0	130	5.3	689
Total direct labor-hours			1,508

The company’s expected total manufacturing overhead is $267,968.

If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $203.83 per unit

• $151.57 per unit

• $355.40 per unit

• $1,119.51 per unit

Answer 1

Answer is $1,119.51

Expected manufacturing overhead = $267,968
Expected direct labor hours = 1,508

Predetermined overhead rate = Expected manufacturing overhead / Expected direct labor hours
Predetermined overhead rate = $267,968 / 1,508
Predetermined overhead rate = $177.70

Product H2:

Expected direct labor hours = 819
Expected production = 130 units

Manufacturing overhead applied = Predetermined overhead rate * Expected direct labor hours
Manufacturing overhead applied = $177.70 * 819
Manufacturing overhead applied = $145,536.30

Manufacturing overhead applied per unit = Manufacturing overhead applied / Expected production
Manufacturing overhead applied per unit = $145,536.30 / 130
Manufacturing overhead applied per unit = $1,119.51