Hartley Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20,000 units annually. Planter is a low-volume item totaling only 6,000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32,000 (20,000 + 12,000). Expected annual manufacturing overhead costs are $960,000. Hartley uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of

Question

Quizplus · Accepted Answer

The overhead rate is $960,000 / 32,000 hours = $30 per direct labor hour. Each Planter requires 2 hours, so the overhead assigned per unit is 2 hours * $30 = $60.00.

Hartley Company Produces Two Products, Flower and Planter