Question

Red Raider Company uses a plantwide overhead rate with direct labor hours as the allocation base. Next year, 400,000 units are expected to be produced taking .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 $2,530,000 $900,000
Direct labor hours 168,000 DLH 110,000 DLH
Machine hours 30,000 MH 8,000 MH

a. $12.34 per unit
b. $63.95 per unit
c. $7.32 per unit
d. $11.11 per unit
e. $15.06 per unit

Answer 1

the correct answer is d. $11.11 per unit

Step-by-step explanation:

($2,530,000 + $900,000)/(168,000 + 110,000) DLH = $12.34 per DLH

$12.34 × .90 = $11.11 per unit