Question

Aleutian Company produces two products: Rings and Dings. They are manufactured in two departments: Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Direct Labor Hours Per Unit Machine Hours Per Unit Rings 970 6 5 Dings 2,330 4 7 All of the machine hours take place in the Fabrication Department, which has estimated total factory overhead of $87,000. All of the labor hours take place in the Assembly Department, which has estimated total factory overhead of $69,400. Aleutian Company uses the multiple production department factory overhead rate method. The Fabrication Department uses machine hours as an allocation base, and the Assembly Department uses direct labor hours. The total factory overhead allocated per unit of Rings is

Answer 1

Rings Total overhead cost per unit is 48.03

Step-by-step explanation:

Fabrication department :

Estimated machine hour = (970 * 5 + 2330 * 7)

=4850 + 16310

= 21,160 machine hour

Overhead cost per machine hour = 87,000/21,160

= 4.11 per hour

Assembly Department :

Estimated Labour hour = (970 * 6 + 2330 * 4)

=5,820 + 9,320

= 15,140

Estimated overhead cost per hour = 69,400/15,140

= 4.58 per hour

CALCULATE RING OVERHEAD COST PER UNIT :

Fabrication department = 4.11 * 5 = 20.55

Assembly department = 4.58 * 6 = 27.48

Total overhead cost per unit = 48.03