Question

epartments have estimated annual factory overhead costs of $256,000 and $480,000, respectively. The Fabrication Dept. expects 25,000 machine hours this year. The Assembly Dept. expects $592,000 DL cost this year. Calculate the factory overhead cost that will be charged to each unit of the two products using multiple production dept. factory overhead rates (round to nearest $0.00).

Answer 1

Factory overhead cost charged to each unit:

Fabrication Assembly

Factory overhead rates $10.24 $0.81

Machine hours per unit 5

Direct labor cost per unit $118.40

Factory overhead cost per unit $51.20 $95.90

Step-by-step explanation:

a) Data and Calculations:

Fabrication Assembly

Annual overhead costs $256,000 $480,000

Expected machine hours 25,000 0

Expected direct labor costs 0 $592,000

Overhead rates $10.24 $0.81

($256,000/25,000) ($480,000/$592,000)

Assuming number of units produced = 5,000

Each unit will consume 5 (25,000/5,000) $118.40 ($592,000/5,000)

machine hours direct labor cost

Overhead cost per unit = $51.20 $95.90

($10.24 * 5) ($118.40 * $0.81)