Whack Ltd, a tennis racquet manufacturer, has broken the production process into three lines, each in...

Whack Ltd, a tennis racquet manufacturer, has broken the production process into three lines, each in a different department: framing, stringing, and finishing. The following information relates to each department for the month of April:

                             FRAMING STRINGING FINISHING
Direct Costs       $20,000      $30,000         $66,000
Indirect Costs $10,000      $20,000         $30,000
Labour Hours   2,000 hrs   5,000 hrs      3,000 hrs
Machine hours 500 hrs      0 hrs            0 hrs
Production for April is 10,000 racquets

Refer to the table above. The overhead recovery rate for stringing and finishing based on direct labour hours is:

A. $5; $ 3.

B. $10; $22.

C. $4; $10.

D. $6; $11.

Expert Solution

Working

Working		Stringing	Finishing
A	Indirect Cost = Overheads	$ 20,000.00	$ 30,000.00
B	Total Direct labor hours as allocation base	5,000	3,000
C = A/B	Overhead recovery rates	$ 4.00	$ 10.00

Answer

Option ‘C’: $ 4 and $ 10

ekkarill92 answered 2 years ago

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