The total materials handling cost allocated to Wall Mirrors using the direct labor-hours allocation method is approximately $1.43 per unit.
To allocate the materials handling cost based on direct labor-hours, we first need to determine the allocation rate. The allocation rate is calculated by dividing the total materials handling cost by the total expected direct labor-hours for all products.
For Wall Mirrors:
Expected direct labor-hours per unit: 14
Total expected units produced: 11,600
Total expected direct labor-hours: 14 * 11,600 = 162,400
Allocation rate: $16,638.70 / 162,400 = $0.10229 per direct labor-hour
Materials handling cost allocated to Wall Mirrors: $0.10229 * 14 = $1.43206 per unit
Complete Question
The controller of Ferrence company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:
Wall mirrors:
Total expected units produced 11600
Total expected material moves 1160
Expected direct labor-hours per unit 14
Specialty Windows:
Total expected units produced 1960
Total expected material moves 1860
Expected direct labor-hours per unit 5
The total material handling cost for the year is expected to be $16,638.70
If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the Wall Mirrors is closest to: (Round your intermediate calculations to 4 decimal places.)