Avella,Inc. ,manufactures and sells two products: Product C2 and Product T1.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The company's expected total manufacturing overhead is $775,080. If the company allocates all of its overhead based on direct labor-hours,the overhead assigned to each unit of Product T1 would be closest to:
A)$426.12 per unit
B)$393.90 per unit
C)$291.00 per unit
D)$877.44 per unit

Question

Avella,Inc. ,manufactures and sells two products: Product C2 and Product T1.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  The company's expected total manufacturing overhead is $775,080. If the company allocates all of its overhead based on direct labor-hours,the overhead assigned to each unit of Product T1 would be closest to:
A)$426.12 per unit 
B)$393.90 per unit 
C)$291.00 per unit 
D)$877.44 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $775,080 ÷ 5,300 DLHs = $146.24 per DLH (rounded)
Product T1: 6.0 DLHs × $146.24 per DLH = $877.44