Cabrini Company produces two products: toy trucks and toy cars. The company uses departmental overhead rates for the two production departments: Moulding and Finishing. Moulding uses machine hours to assign overhead and Finishing uses direct labour hours; 50,000 trucks and 250,000 cars are produced. Please find the following data:
$\begin{array}{|l|c|c|c|}
\hline & \text { Moulding } & \text { Finishing } & \text { Total } \
\hline \text { Estimated overhead } & \$ 250,000 & \$ 100,000 & \$ 350,000 \
\hline \text { Actual overhead } & \$ 240,000 & \$ 120,000 & \$ 360,000 \
\hline & & & \\hline \text { Expected direct labour hours } & & & \
\hline \text { Trucks } & 5,000 & 5,000 & 10,000 \
\hline \text { Cars } & 5,000 & 35,000 & 40,000 \
\hline \text { Expected machine hours } & & & \\hline \text { Trucks } & 17,000 & 3,000 & 20,000 \
\hline \text { Cars } & 3,000 & 7,000 & 10,000 \
\hline \text { Actual direct labour hours } & & & \
\hline \text { Trucks } & 4,500 & 5,300 & 10,000 \
\hline \text { Cars } & 5,500 & 34,500 & 40,000 \\hline \text { Actual machine hours } & & & \
\hline \text { Trucks } & 16,500 & 3,500 & 20,000 \
\hline \text { Cars } & 3,200 & 6,800 & 10,000 \
\hline
\end{array}$
-Refer to the figure.What is the overhead per unit for cars (rounded to two decimal places)?

Question

Quizplus · Accepted Answer

The overhead per unit for cars is calculated by dividing the total overhead allocated to cars by the number of cars produced. The Moulding department uses machine hours, and the Finishing department uses direct labour hours to allocate overhead. Calculate the overhead rate for each department, allocate the overhead to cars, and then divide by the number of cars produced.

Cabrini Company Produces Two Products: Toy Trucks and Toy Cars