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 $479,408, using 315,400 direct labor hours. The factory overhead budget for the Assembly Department is $372,840, using 78,000 direct labor hours.

If a table lamp requires 4 hours of fabrication and 7 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.$10.93

b.$120.18

c.$4.78

d.$39.54

Answer 1

--Correct Answer - Option 'D' $ 39.54 [$6.08 + 33.45]

		Fabrication	Assembly
A	Overhead	$479,408	$372,840
B	DLHs	315400	78000
C = A/B	Overhead rate	$                         1.52	$                                      4.78
D	DLH used by table lamp	4	7
E = C x D	Amount of overhead allocated	$                         6.08	$                                    33.46