Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen

تمرين 27

DEPARTMENTAL OVERHEAD RATES
Fleming, Inc., provided the following data for its two producing departments:

Machine hours are used to assign the overhead of the Polishing Department, and direct labor hours are used to assign the overhead of the Painting Department. There are 60,000 units of Frame A produced and sold and 100,000 of Frame B.
Required:
1. Calculate the overhead rates for each department.
2. Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours?
3. What if the machine hours in Polishing were 2,000 for Frame A and 8,000 for Frame B and the direct labor hours used in Painting were 14,000 and 6,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plant-wide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?