Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.
|Direct Labor Hours
All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $72,000.
Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs based on direct labor hours. The factory overhead allocated per unit of Dinks is
Factory overhead allocated per unit of Dinks = Plantwide factory overhead rate * Direct labor hours per unit
Plantwide factory overhead rate = Total Budgeted factory overhead / Total Budgeted plantwide allocation base
Total Budgeted factory overhead = ($84,000 + $72,000)
Total Budgeted plantwide allocation base = (1,000 * 4) + (2,000 * 2)
= 8,000 direct labor hours
Plantwide factory overhead rate = $156,000 / 8,000 direct labor hours
= $19.50 per direct labor hours
Factory overhead allocated per unit of Dinks = $19.50 * 2
Get Answers For Free
Most questions answered within 1 hours.