Lansing, Inc., provided the following data for its two producing departments: Molding Polishing...
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Accounting
Lansing, Inc., provided the following data for its two producing departments:
Molding
Polishing
Total
Estimated overhead
$400,000
$80,000
$480,000
Direct labour hours (expected andactual):
Form A
1,000
5,000
6,000
FormB
4,000
15,000
19,000
Total
5,000
20,000
25,000
Machine hours:
Form A
3,500
3,000
6,500
FormB
1,500
2,000
3,500
Total
5,000
5,000
10,000
Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B.
Required:
1.Calculate the overhead rates for each department.
2.Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. How does this compare with-the plant wide rate unit cost, using direct labor hours?
3.What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form Band the direct labour hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates,and compare with the plan twide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
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