exercise 17-9 (algo) allocating overhead using plantwide rate and departmental rates lo p1, p2\nlaval…

exercise 17-9 (algo) allocating overhead using plantwide rate and departmental rates lo p1, p2\nlaval produces lighting fixtures. budgeted information for its two production departments follows. the departments use machine hours (mh) and direct labor hours (dlh).\n| | fabricating | assembly |\n|--|--|--| \n| overhead cost | $1,190,000 | $192,000 |\n| direct labor hours | 156,750 dlh | 16,000 dlh |\n| machine hours | 85,000 mh | 66,500 mh |\nlaval reports the following for one of its products, a desk lamp.\n| | fabricating department | assembly department |\n|--|--|--| \n| number of units | 4,000 | |\n| direct labor hours per unit | 3 dlh per unit | 2 dlh per unit |\n| machine hours per unit | 2 mh per unit | 0.3 mh per unit |\ncomplete this question by entering your answers in the tabs below.\nrequired 1 required 2 required 3 required 4\ndetermine the plantwide overhead rate using 172,750 direct labor hours as the allocation base.

exercise 17-9 (algo) allocating overhead using plantwide rate and departmental rates lo p1, p2\nlaval produces lighting fixtures. budgeted information for its two production departments follows. the departments use machine hours (mh) and direct labor hours (dlh).\n| | fabricating | assembly |\n|--|--|--| \n| overhead cost | $1,190,000 | $192,000 |\n| direct labor hours | 156,750 dlh | 16,000 dlh |\n| machine hours | 85,000 mh | 66,500 mh |\nlaval reports the following for one of its products, a desk lamp.\n| | fabricating department | assembly department |\n|--|--|--| \n| number of units | 4,000 | |\n| direct labor hours per unit | 3 dlh per unit | 2 dlh per unit |\n| machine hours per unit | 2 mh per unit | 0.3 mh per unit |\ncomplete this question by entering your answers in the tabs below.\nrequired 1 required 2 required 3 required 4\ndetermine the plantwide overhead rate using 172,750 direct labor hours as the allocation base.

Answer

Explanation:

Step1: Calculate total overhead cost

The total overhead cost is the sum of the overhead cost in the Fabricating and Assembly departments. So, $1,190,000 + 192,000=1,382,000$.

Step2: Calculate plant - wide overhead rate

The plant - wide overhead rate is calculated by dividing the total overhead cost by the total direct - labor hours. The total direct - labor hours are 172,750. So the rate is $\frac{1,382,000}{172,750}=8$.

Answer:

$8$ per direct - labor hour