Daffodil 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 $800,000.Daffodil 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 calculated by dividing total overhead costs by total direct labor hours: $800,000 / 32,000 hours = $25 per hour. Each Planter requires 2 hours, so the overhead assigned per unit is 2 hours * $25 = $50.00.

Daffodil Company Produces Two Products, Flower and Planter