Herd, Inc., manufactures and sells two products: Product J5 and Product A9.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 $848,432. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product A9 would be closest to:

A) $202.24 per unit
B) $536.96 per unit
C) $222.72 per unit
D) $538.72 per unit

Question

Herd, Inc., manufactures and sells two products: Product J5 and Product A9.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 $848,432. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product A9 would be closest to:

A) $202.24 per unit
B) $536.96 per unit
C) $222.72 per unit
D) $538.72 per unit

Robert Cortez · Accepted Answer

Final Answer : D, Explanation :  Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours= $848,432 ÷ 12,600 DLHs = $67.34 per DLH (rounded)Product A9: 8.0 DLHs × $67.34 per DLH = $538.72

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