Question

Hartley Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20000 units annually. Planter is a low-volume iterm totaling only 6000 units per year. Flower requires 1 hour or are 2000 completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32000 12000). Expected annual manufacturing overhead costs are $960000. Hartey uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of:________.

a. need more information to compute.
b. $60.
c. $30.
d. $36.92

Answer 1

The correct answer is A.

Step-by-step explanation:

Giving the following information:

Estimated manufacturing overhead= 960,000

Estimated number of hours= 32,000

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 960,000/32,000= $30 per direct labor hour

Now, we can allocate to each unit of Planter:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 30*2= $60