Question

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments - Fabrication and Assembly. Data for the products and departments are listed below. Number of Labor Hours Machine Hours Product Units Per Unit Per Unit Rings 990 Dings 2,080 10 4 9 8 All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $83,600. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $68,900. The Aleutian Company uses a departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours. What is the overhead cost per unit for Dings? Oa. a. $38.65 Ob. $49.67 Oc. $4.14 Od. $54.82

Answer 1

d.$54.82

Overhead cost per unit for Dings is calculated as:

Total labor hours=Labor hour per unit*Rings+Labor hour per unit*Dings

Total labor hours=4*990+8*2,080

Total labor hours=3,960+16,640

Total labor hours=20,600

Total assembly department overhead=$68,900

Labor hour overhead rate=68,900/20,600

Labor hour overhead rate=$3.34

Total machine hours=Machine hour per unit*Rings+Machine hour per unit*Dings

Total machine hour=9*990+10*2,080

Total machine hour=8,910+20,800

Total machine hour=29,710

Total fabrication department overhead=$83,600

Machine hour overhead rate=83,600/29,710

Machine hour overhead rate=$2.81

Overhed cost per unit of Dings=Labor hour rate*Number of labor hours+Machine hour rate*Number of machine hours

Overhead cost per unit for Dings=$3.34*8+$2.81*10

Oveehead cost per unit for Dings=$26.72+$28.10

Oveehead cost per unit for Dings=$54.82