Question

Automobile bumpers590 810 Valve covers310 570 Wheels350 620 1,250 2,000 Plating Department Automobile bumpers195 1,150 Valve covers200 700 Wheels195 750 590 2,600 Total1,840 4,600 Required: 1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours. Direct labor hour overhead rate$ 130 per direct labor hour Machine hour overhead rate$ per machine hour 2. Determine the product factory overhead costs, using (a) the direct labor hour plantwide factory overhead rate and (b) the machine hour plantwide factory overhead rate. Automobile BumpersValve CoversWheels Direct labor hours$ $ $ Machine hours$ $ $

Answer 1

OVERHEAD APPLIED USING DIRECT LABOR

Stamping // Labor Hours // Applied Overhead

bumpers 590 $ 76,700

Valve 310 $ 40,300

Wheels 350 $ 45,500

1250 $ 162,500

Planting // Labor Hours // Applied Overhead

bumpers 195 $25,350

Valve 200 $26,000

Wheels 195 $25,350

590 $76,700

OVERHEAD APPLIED USING MACHINE HOURS

Stamping // Machine Hours // Applied Overhead

bumpers 810 $42,120

Valve 570 $29,640

Wheels 620 $32,240

2000 $104,000

Planting // Machine Hours // Applied Overhead

bumpers 1150 $59,800

Valve 700 $36,400

Wheels 750 $39,000

2600 $135,200

Step-by-step explanation:

As the overhead rate using labor hours is $130 Then:

Total expected overhead: $130 x 1,840 labor hours = $239,200

Machine Hours overhead rate:

$ 239,200 / 4,600 hours = $52

To get the amount of overhead applied on each product we multiply their use of the cost drive by the overhead rate.