Question

Zion Electronics Company produces two products, Resistors and Transistors in a small manufacturing plant which had total manufacturing overhead of $21,000 in June. The factory has two departments, Design, which incurred $10,000 of manufacturing overhead, and Production which incurred $11,000 of manufacturing overhead. Design used 250 hours of direct labor and Production used 80 machine hours.

Assume that Resistors used 100 direct labor hours to make 100 units and Transistors used 150 direct labor hours to make 100 units in the Design Department. Also, assume that Resistors used 50 machine hours and Transistors used 30 machine hours in the Production Department.

The overhead costs assigned to each unit of Resistors and Transistors using department overhead rate were:

	A.	$108.75 for Resistors and $101.25 for Transistors
	B.	$40 for Resistors and $137.50 for Transistors
	C.	$234.30 for Resistors and $215.60 for Transistors
	D.	$177.50 for Resistors and $177.50 for Transistors

Answer 1

Particulars		Amount		Amount
Predetermined overhead rate of Design Department		10,000/250		=$40 per DLH
Predetermined overhead rate of Production Department		11,000/80		=$137.50 Per MH
a) Resistor used direct labor hours per unit		100/100		=1
Resistor used machine hours per unit		50/100		=0.50
Overhead cost assigned to resistor for design		$40*1	$	=40 Per unit
Overhead cost assigned to resistor for production		$137.50*0.50	$	=68.75 per unit
Overhead cost to resistor				=108.75 per unit
b) Transistor used direct labor hours per unit		150/100		1.5
Transistor used machine hours per unit		30/100		0.30
Overhead cost assigned to Transistor for design		40*1.5	$	=60 Per unit
Overhead cost assigned to Transistor for production		137.50*.3	$	41.25 Per unit
Overhead cost to resistor				$101.25 Per Unit

Ans;

A.$108.75 for Resistors and $101.25 for Transistors