Question

Help Save & E Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct material and direct labor costs are detailed 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 $434.080. The direct labor and direc materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 31,000 units of CCt and 100,000 units of CC2 next year. Direct Material per Unit $38.00 $26.10 Direct Labor Dollars per Unit $18.48 $16.00 ped CC1 CC2 Compute the plantwide overhead rate for next year $4 00 per DLH $34 40 per DuH

Answer 1

Correct answer---$4 per DLH

Calculation of Plantwide Overhead rate
(A)	Total estimated Manufacturing Overheads	$ 4,34,080.00
(B)	Total Direct labor Hours expected	$ 1,08,520.00
(A/B)	Plantwide overhead rate per Labor Hour	$ 4.00

Calculation of total expected hours
		CC1	CC2
A	Direct labor cost per unit	$             18.40	$    16.00
B	Direct klabor rate	20	20
C=A/B	Labor hours per unit	0.92	0.8
D	Total units to be produced next year	31000	100000
E=C x D	Total hours required per unit	28520	80000
	Total hours required Combined	1,08,520