Question

11.

Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records.

Production Activity	Indirect Labor				Indirect Materials				Other Overhead
Grinding	$	390,000
Polishing					$	200,000
Product modification		450,000
Providing power									$	220,000
System calibration		570,000

Additional information on the drivers for its production activities follows.

Grinding	9,000	machine hours
Polishing	9,000	machine hours
Product modification	1,800	engineering hours
Providing power	17,000	direct labor hours
System calibration	900	batches

	Job 3175		Job 4286
Number of units	160	units	2,000	units
Machine hours	300	MH	3,000	MH
Engineering hours	33	eng. hours	28	eng. hours
Batches	20	batches	60	batches
Direct labor hours	450	DLH	4,050	DLH

Required:
5. If the company uses a plantwide overhead rate based on direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286? (Do not round intermediate calculations. Round "OH Cost per unit" answers to 2 decimal places.)

	Product DL hours Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Job 3175 Job 4286

Answer 1

Production Activity	Indirect Labor	Indirect Materials	Other Overhead	Total overhead
Grinding	390,000			390,000
Polishing		200,000		200,000
Product modification	450,000			450,000
Providing power			220,000	220,000
System calibration	570,000			570,000
Total Overhead	1,410,000	200,000	220,000	1,830,000

Total overhead = $1,830,000

Number of direct labor hours = 17,000

Predetermined overhead rate = Total overhead/ Number of direct labor hours

= 1,830,000/17,000

= $107.6470588235 per direct labor hour

Product	DL hours	Plantwide OH rate	Total Overhead Cost	Units Produced	OH Cost per unit
Job 3175	450	107.6470588235	48,441.18	160	302.76
Job 4286	4,050	107.6470588235	435,970.59	2,000	217.99

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