A company produces heating elements which go through two operations, casting and assembling, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.
$$\begin{array} { l c c }
& \text { Casting } & \text { Assembling } \
\text { Direct labor hours } & 1,875 \mathrm { DLH } & 7,500 \mathrm { DLH } \
\text { Machine hours } & 12,500 \mathrm { MH } & 3,750 \mathrm { MH } \
\text { Overhead costs } & \$ 75,000 & \$ 37,500
\end{array}$$

Question

A company produces heating elements which go through two operations, casting and assembling, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.
 $$\begin{array} { l c c } 
& \text { Casting } & \text { Assembling } \
\text { Direct labor hours } & 1,875 \mathrm { DLH } & 7,500 \mathrm { DLH } \
\text { Machine hours } & 12,500 \mathrm { MH } & 3,750 \mathrm { MH } \
\text { Overhead costs } & \$ 75,000 & \$ 37,500
\end{array}$$

Quizplus · Accepted Answer

The departmental overhead rate for the assembling department is calculated by dividing the total overhead costs by the total direct labor hours: $37,500 / 7,500 DLH = $5 per direct labor hour.

A Company Produces Heating Elements Which Go Through Two Operations