Q7 : Wall Nuts, Inc. produces paneling that requires two processes, A and B, to complete. Oak is the best-selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown in the following table:Direct materials$380,000Direct labor Department A (6,000 DLH × $25 per DLH)$150,000Department B (35,125 DLH × $16 per DLH)$562,000Machine Hours Department A24,000 MHDepartment B32,000 MHWall Nuts' total expected overhead costs and related overhead data are shown below. Department ADepartment BDirect labor hours67,000 DLH170,000 DLHMachine hours100,000 MH80,000 MHManufacturing overhead costs$450,000$600,000Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B. Select one:a. $4.50 per MH in Dept. A; $4.50 per MH in Dept. B.b. $7.50 per MH in Dept. A; $7.50 per MH in Dept. B.c. $4.50 per MH in Dept. A; $7.50 per MH in Dept. B.d. $2.70 per MH in Dept. A; $6.00 per MH in Dept. B.e. $0.60 per MH in Dept. A; $0.80 per MH in Dept. B.

Introduction: The departmental overhead rate is the expense rate for each division in a factory…

Answered: Q7 : Wall Nuts, Inc. produces paneling…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q7 : Wall Nuts, Inc. produces paneling that requires two processes, A and B, to complete. Oak is the best-selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown in the following table:

Direct materials	$380,000
Direct labor
Department A (6,000 DLH × $25 per DLH)	$150,000
Department B (35,125 DLH × $16 per DLH)	$562,000
Machine Hours
Department A	24,000 MH
Department B	32,000 MH

Wall Nuts' total expected overhead costs and related overhead data are shown below.

	Department A	Department B
Direct labor hours	67,000 DLH	170,000 DLH
Machine hours	100,000 MH	80,000 MH
Manufacturing overhead costs	$450,000	$600,000

Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B.

Select one:

a. $4.50 per MH in Dept. A; $4.50 per MH in Dept. B.

b. $7.50 per MH in Dept. A; $7.50 per MH in Dept. B.

c. $4.50 per MH in Dept. A; $7.50 per MH in Dept. B.

d. $2.70 per MH in Dept. A; $6.00 per MH in Dept. B.

e. $0.60 per MH in Dept. A; $0.80 per MH in Dept. B.

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