Question

leutian Company uses the multiple production department factory overhead rate method. The Fabrication Department uses machine hours as an allocation base, and the Assembly Department uses direct labor hours. The Assembly Department's factory overhead rate is

Answer 1

$5.28 per direct labor hour

Step-by-step explanation:

The computation of the assembly department factory overhead rate is shown below:

The Assembly Department's factory overhead rate = Estimated total factory overhead ÷ Total Direct Labor hours

where,

Estimated total factory overhead for Assembly Department = $71,800.

And,

Total Direct Labor hours is

= [910 units × 6 hours per unit] + [2,710 × 3 hours per unit]

= 5,460 hours + 8,130 hours

= 13,590 direct labor hour

So, the assembly department factory overhead rate is

= $71,800 ÷ 13,590 direct labor hour

= $5.28 per direct labor hour