Madison Enterprises manufactures and sells two types of dump trucks, Standard and Economy. The company's production...

 

Transcribed Image Text:

Madison Enterprises manufactures and sells two types of dump trucks, Standard and Economy. The company's production process is organized into two departments, Fabrication and Assembly. For the upcoming year, Madison estimates total direct labor hours (DLHs) of 15,660, total machine hours (MHs) of 12,500, and total manufacturing overhead of $6,264,000. Historically, Madison applied overhead to jobs using a plantwide rate based on DLHs. Madison's production schedule for the upcoming, in terms of units produced, DLHS per unit, and total DLHs for the plant is as follows: Standard Economy Units produced DLH per unit 180 102 70 30 Madison plans to switch to departmental rates based on MHs for the Fabrication Department and DLHs for the Assembly Department. Here are estimated overhead data for the upcoming year: Fabrication department Assembly department Total overhead costs Plantwide DLH 12,600 3,060 $2,739,000 $3,525,000 Usage of allocation base 30 Economy 70 Standards 4,900 MHS 10,500 DLHS 5,100 MHS 3,600 DLHs Totals 10,000 MHS 14,100 DLHS How much higher or lower will the estimated per-unit manufacturing cost of a Standard truck be if it is computed using departmental overhead rates rather than a plantwide overhead rate? Madison Enterprises manufactures and sells two types of dump trucks, Standard and Economy. The company's production process is organized into two departments, Fabrication and Assembly. For the upcoming year, Madison estimates total direct labor hours (DLHs) of 15,660, total machine hours (MHs) of 12,500, and total manufacturing overhead of $6,264,000. Historically, Madison applied overhead to jobs using a plantwide rate based on DLHs. Madison's production schedule for the upcoming, in terms of units produced, DLHS per unit, and total DLHs for the plant is as follows: Standard Economy Units produced DLH per unit 180 102 70 30 Madison plans to switch to departmental rates based on MHs for the Fabrication Department and DLHs for the Assembly Department. Here are estimated overhead data for the upcoming year: Fabrication department Assembly department Total overhead costs Plantwide DLH 12,600 3,060 $2,739,000 $3,525,000 Usage of allocation base 30 Economy 70 Standards 4,900 MHS 10,500 DLHS 5,100 MHS 3,600 DLHs Totals 10,000 MHS 14,100 DLHS How much higher or lower will the estimated per-unit manufacturing cost of a Standard truck be if it is computed using departmental overhead rates rather than a plantwide overhead rate?