Question

need help with question #6

E) $2.00 per MH 5) Dazzle, Inc. produces beads for jewelry making use. The following information summarizes production operations for June, The journal entry to record June production activities for overhead allocation is: Direct materials used Direct labor used Predetermined overhead rate (based on direct labor) Goods transferred to finished goods Cost of goods sold Credit sales 87,000 160,000 155% 432,000 444,000 810,000 A) Debit Factory Overhead $248,000; credit Cash $248,000. B) Debit Work in Process Inventory $160,000; credit Factory Payroll $160,000. C) Debit Work in Process Inventory $248,000; credit Factory Overhead $248,000. D) Debit Work in Process Inventory $160,000; credit Factory Overhead $160,000. E) Debit Work in Process Inventory $160,000; credit Cash $160,000. 6) Crinkle Cut Clothes Company manufactures two products CCI 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 $338,250. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CCl and 91,000 units of CC2 next year. Direct Direct Labor Dollars Material per Unit $ 22.40 $ 15.40 per Unit 37.10 CCI $ 25.20 CC2 Compute the plantwide overhead rate for next year. A) $28.00 per DLH B) $37.80 per DLH C) $1.35 per DLH D) $5.00 per DLH E) $.20 per DLH.

Answer 1

Ans.	Option   D        $5.00   per DLH
	Plantwide overhead rate   = Estimated overhead / Estimated direct labor hours
	$338,250 / 67,650
	$5.00	per DLH
	*Working Notes:
	Direct labor hours per unit = Direct labor dollars per unit / Direct labor cost
CC 1	$22.40 / $28	0.80	direct labor hours per unit
CC 2	$15.40 / $28	0.55	direct labor hours per unit
	Total direct labor hours = Direct labor hours per unit * Expected units to manufacture
CC 1	0.80 * 22,000	17600	Direct labor hours
CC 2	0.55 * 91,000	50050	Direct labor hours
	*Total expected direct labor hours =   17,600 + 50,050 = 67,650