Homework SourseAvella Inc manufactures and sells two products Product C2 an
Avella, Inc., manufactures and sells two products: Product C2 and Product T1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
The company\'s expected total manufacturing overhead is $775,069.
If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product T1 would be?
| Expected Production | Direct Labor-Hours Per Unit | Total Direct Labor-Hours | |
| Product C2 | 125 | 5.0 | 625 |
| Product T1 | 800 | 7.0 | 5,600 |
| Total direct labor-hours | 6,225 |
Solution
Calculate overhead rate :
Overhead rate = 775069/6225 = 124.51 per labour hour
Overhead assigned to product T1 = 124.51*5600 = 697250.83
f the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product T1 would be = 697250.83/800 = $871.56
