Lansing, Inc., provided the following data for its two producing departments:

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 plantwide 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 B and the direct labor 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 plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?

Transcribed Image Text:

Molding $400,000 Polishing Total $80,000 S480,000 Estimated overhead Direct labor hours (expected and actual) Form A Form B 1,000 4,000 5,000 5,000 15,000 20,000 6,000 19,000 25,000 Total Machine hours Form A Form B 3,500 1,500 5,000 3,000 2,000 5,000 6,500 3,500 10,000 Total