Question

Red Raider Company uses a plantwide overhead rate with direct labor hours as the allocation base. Next year, 590,000 units are expected to be produced requiring 0.90 direct-labor hours each. How much overhead will be assigned to each unit produced given the following estimated amounts? Estimated: Department 1 Department 2 Manufacturing overhead costs $ 2,568,000 $ 957,000 Direct labor hours 187,000 DLH 129,000 DLH Machine hours 31,900 MH 9,900 MH

Answer 1

Allocated unitary overhead= $6.64

Step-by-step explanation:

Giving the following information:

Plantwide overhead rate with direct labor hours as the allocation base.

Next year, 590,000 units are expected to be produced requiring 0.90 direct-labor hours each.

Estimated:

Department 1

Manufacturing overhead costs $ 2,568,000

Direct labor hours 187,000

Machine hours 31,900

Department 2

Manufacturing overhead costs $ 957,000

Direct labor hours 129,000

Machine hours 9,900

actual hours of allocation base= 590,000*0.90= 531000 hours

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate D1= 2568000/531000= 4.84

Estimated manufacturing overhead rate D2= 957000/531000= 1.80

Allocated unitary overhead= 4.84 + 1.80= $6.64