Question

Laval produces lamps and home lighting fixtures. Its most popular product is a brushed aluminum desk lamp. This lamp is made from components shaped in the fabricating department and assembled in the assembly department. Information related to the 35,000 desk lamps produced annually follows.

Direct materials	$	280,000
Direct labor
Fabricating department (7,000 DLH × $20 per DLH)	$	140,000
Assembly department (16,000 DLH × $29 per DLH)	$	464,000
Machine hours
Fabricating department		15,040	MH
Assembly department		21,000	MH

Expected overhead cost and related data for the two production departments follow.

	Fabricating			Assembly
Direct labor hours		75,000	DLH		125,000	DLH
Machine hours		80,000	MH		62,500	MH
Overhead cost	$	300,000		$	200,000

Required:
1. Determine the plantwide overhead rate for Laval using direct labor hours as a base.
2. Determine the total manufacturing cost per unit for the aluminum desk lamp using the plantwide overhead rate.
3. Compute departmental overhead rates based on machine hours in the fabricating department and direct labor hours in the assembly department.
4. Use departmental overhead rates from requirement 3 to determine the total manufacturing cost per unit for the aluminum desk lamps.

Answer 1