Question

Smythe Co. makes furniture. The following data are taken from its production plans for the year. Direct labor costs $ 5,780,000 Hazardous waste disposal costs 615,000 Chairs Tables Expected production 210,000 units 9,000 units Direct labor hours required 258,000 DLH 16,200 DLH Hazardous waste disposed 500 pounds 300 pounds Required:

1. 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.
		0
Product	Activity Driver	OH $ per direct labor hour	Total Overhead Cost	Units Produced	OH Cost per unit
Chairs		$0.00	$0		0
Tables		$0.00	$0		0
2. Determine hazardous waste disposal costs per unit for chairs and for tables if costs are assigned based on the number of pounds disposed of.
		0
Product	Activity Driver	OH $ per pound	Total Overhead Cost	Units Produced	OH Cost per unit
Chairs		$0.00	$0		0
Tables		$0.00	$0		0

Answer 1

singleplantwise rate on basis of labour hours = waste disposal costs / total labour hours

singleplantwise rate on basis of labour hours = 615000 / ( 258000 + 16200)

singleplantwise rate on basis of labour hours = 615000 / 274200

singleplantwise rate on basis of labour hours = 2.242

disposal cost for chair = 2.242 x no of labour hours of chair

disposal cost for chair = 2.242 x 258000

disposal cost for chair = 578665.2

no of units of chair = 21000

disposal cost per unit of chair = 578665.2 / 21000 = 27.56

disposal cost for table = 2.242 x no of labour hours of table

disposal cost for table = 2.242 x 16200

disposal cost for table = 36334.8

no of units of table = 9000

disposal cost per unit of table = 36334.8 / 9000 = 4.04

product	activity driver	OH per direct LH	total OH cost	units	cost per unit
chair	labour hour	2.242	578665.2	21000	27.56
table	labour hour	2.242	36334.8	9000	4.04

singleplantwise rate on basis of pounds = waste disposal costs / total pounds

singleplantwise rate on basis of pounds = 615000 / ( 500 + 300)

singleplantwise rate on basis of pounds = 615000 / 800

singleplantwise rate on basis of pounds = 768.75

disposal cost for chair = 768.75 x no of pounds of chair

disposal cost for chair = 768.75 x 500

disposal cost for chair = 384375

no of units of chair = 21000

disposal cost per unit of chair = 384375 / 21000 = 18.3

disposal cost for table = 768.75 x no of pounds of table

disposal cost for table = 768.75 x 300

disposal cost for table = 230625

no of units of table = 9000

disposal cost per unit of table = 230625 / 9000 = 26.625

product	activity driver	OH per pound	total OH cost	units	cost per unit
chair	pound	786.75	384375	21000	18.30
table	pound	786.75	230625	9000	25.625

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