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 260 7.6 1,976
Product E0 260 6.6 1,716
Total direct labor-hours 3,692
The company’s expected total manufacturing overhead is $274,468.

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.)

Answer 1

$564.98

Step-by-step explanation:

For computing the allocated amount of product H2, first we have to determine the overhead rate which is shown below:

Overhead rate = Total manufacturing overhead ÷ Total direct labor-hours

= $274,468 ÷ 3,692 direct labor hours

= $74.34 per hour rate

Now the overhead allocated amount would be

= Overhead rate × Direct labor hours per unit of product H2

= $74.34 × 7.6

= $564.98