Question

Smythe Co. makes furniture. The following data are taken from its production plans for the year.

Direct labor costs $5,530,000
Hazardous waste disposal costs 615,000
Chairs Tables
Expected production 210,000 units 23,000 units
Direct labor hours required 268,000 DLH 16,400 DLH
Hazardous waste disposed 600 pounds 600 pounds
Required:
Determine the hazardous waste disposal cost per unit for chairs and for tables if costs are assigned using a single plantwide overhead rate based on direct labor hours.

Answer 1

Answer:The hazardous waste disposal cost per unit for chair and table respectively is $2.83 and $1.54

Step-by-step explanation:

From the question, If cost are assigned at a rate based on direct labor hours, then the total disposal cost for chairs is

total disposal cost for chairs =Direct labor hours required for chairs/Total Direct labor hours required for both furniture x Hazardous waste disposal costs

268,000/ 268,000+16,400 x 615,000

= 268,000/ 284,400 x 615,000

===$595,535.865

and for tables for is

total disposal cost for tables=Direct labor hours required for tables /Total Direct labor hours required for both furniture x Hazardous waste disposal costs

16,400 / 268,000+16,400 x 615,000

= 16,400 / 284,400 x 615,000

===$35,464.135

The hazardous waste disposal cost per unit for chair and table respectively is

For chair ====total disposal cost for chairs/ Expected production of chairs

$595,535.865/210,000 units= $2.83

For table ====total disposal cost for table/ Expected production oftable

$35,464.135/23,000 units=$1.54