Question

Spates, Inc., manufactures and sells two products: Product H2 and Product E0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

	Expected Production	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product H2	200	7.0	1,400
Product E0	200	6.0	1,200
Total direct labor-hours			2,600

The company’s expected total manufacturing overhead is $271,468.

If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Correct answer------------$730.87 or $731

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Labor related	Number of DLH	$ 271,468	2600	$          104.41	Per DLH

.

	(A) Rate per hour	(B) Hours per unit	(A x B)
	$        104.41	7.00	$ 730.87