Exercise $17-9($Algo$)$ Allocating overhead using plantwide rate and departmental rates LO P$1,$ P$2$

Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours $($MH$)$ and direct labor hours $($DLH$).$

Fabricating Assembly

Overhead cost $ $510,000$ $ $588,000$

Direct labor hours $141,000$ DLH $42,000$ DLH

Machine hours $85,000$ MH $79,500$ MH

Laval reports the following for one of its products, a desk lamp.

Number of Units Fabricating Department Assembly Department

Direct Labor Hours per Unit Machine Hours per Unit Direct Labor Hours per Unit Machine Hours per Unit

Desk lamp $5,0004$ DLH per unit $4$ MH per unit $2$ DLH per unit $0\mathrm{.}6$ MH per unit

Required:

$1.$ Determine the plantwide overhead rate using $183,000$ direct labor hours as the allocation base.

$2.$ Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate.

$3.$ Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hours in the Assembly department.

$4.$ Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.