Question

Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $492,354, using 482,700 direct labor hours. The factory overhead budget for the Assembly Department is $469,234, using 62,900 direct labor hours.

If a table lamp requires 5 hours of fabrication and 8 hour of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of table lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is

a.$7.46

b.$15.29

c.$198.72

d.$64.78

Answer 1

--Correct Answer = Option 'D' $ 64.78 [=$ 5.10 + $ 59.68 see working below]

Working		fabrication	assembly
A	Overhead cost	$492,354	$469,234
B	Budgeted DLHs	482700	62900
C = A/B	Overhead rate per DLHs	$                                                     1.02	$                                                                  7.46
D	NO. of DLHs per units	5	8
E = C x D	Total Overhead allocated per unit = Answer	$                                                     5.10	$                                                               59.68