Overhead cost Direct labor hours. Machine hours Desk lamp. 131,600 DLH 90,000 MH Laval reports the following for one of its products, a desk lamp. Fabricating Department Number of Direct Labor Hours per Machine Hours per Units Unit Unit 6,000 4 DLH per unit 3 MH per unit Fabricating $ 1,260,000 Required: 1. Determine the plantwide overhead rate using 159,600 direct labor hours as the allocation base. 2. Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate. 3. Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hours In the Assembly department. 4. Determine the overhead cost per unit for the desk lamp using the departmental overhead rates. Desk lamp Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assembly $ 336,000 S Determine the plantwide overhead rate using 159,600 direct labor hours as the allocation base. 10 per direct labor hour Budgeted overhead costs $ 1,506,000 Budgeted direct labor hours 150,000 Required 1 28,000 DLH 72,500 MH Required 1 Required 2 Required 3 Required 4 Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate. Hours Used DLHS Plantwide Overhead Rate Department Fabricating $ $ Assembly Total Answer is not complete. Required 2 < Required 1 s 32 32 Xper direct labor hour Required 3 What is the departmental overhead rate for the Fabricating Department? S 1,260,000✔ Budgeted overhead costs Budgeted machine hours 14 ✓ 12 < Required 1 ✓ 90,000 What is the departmental overhead rate for the Assembly Department? Budgeted overhead costs $336,000✔ Budgeted direct labor hours ✔✓ 28,000✔ Assembly Department Direct Labor Hours per Machine Hours per Unit Unit 8.4 MH per unit 2 DLH per unit < Required 2 Required 4 Departmental Overhead Rate Required 2 > per machine hour per direct labor hour ✔ < Required 3 Required 3 > Determine the overhead cost per unit for the desk lamp using the departmental overhead rates. Hours per Unit Overhead Cost per Unit 14 per machine hour ✓ 12✔ per direct labor hour ✓✔ Required 4 > 3 S 20 S Overhead Cost per Unit 120 Xper unit per unit per unit Required 4 > 24 144
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH).
- Determine the plantwide
overhead rate using 159,600 direct labor hours as the allocation base. - Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate.
- Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hours in the Assembly department.
- Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.
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