Question

Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for this year follow. Molding Trimming Direct labor hours 52,000 DLH 48,000 DLH Machine hours 30,500 MH 3,600 MH Overhead costs $ 730,000 $ 590,000 Data for two special-order parts to be manufactured by the company in this year follow. Part A27C Part X82B Number of units 9,800 units 54,500 units Machine hours Molding 5,100 MH 1,020 MH Trimming 2,600 MH 650 MH Direct labor hours Molding 5,500 DLH 2,150 DLH Trimming 700 DLH 3,500 DLH Required: 1. Compute the plantwide overhead rate using direct labor hours as the base. 2. Determine the overhead cost assigned to each product line using the plantwide rate computed in requirement 1.

Answer 1

Answer:

Results are below.

Explanation:

First, we need to calculate the predetermined plantwide overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

total estimated overhead costs for the period= $1,320,000

total amount of allocation base= 100,000

Predetermined manufacturing overhead rate= 1,320,000 / 100,000

Predetermined manufacturing overhead rate= $13.2 per direct labor hour

Now, we can allocate overhead to each product line:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Part A27C:

Allocated MOH= 13.2*(5,500 + 700)

Allocated MOH= $81,840

Part X82B:

Allocated MOH= 13.2*(2,150 + 3,500)

Allocated MOH= $74,580