Blackwelder Factory Produces Two Similar Products: Small Table Lamps and Desk

question 98

Multiple Choice

Blackwelder Factory produces two similar products: small table lamps and desk lamps. The total factory overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small table lamp production will require 275,000 direct labor hours, and desk lamp production will need 125,000 direct labor hours.​
-Using a single plantwide factory overhead rate with an allocation base of direct labor hours, the factory overhead that Blackwelder Factory will allocate to small table lamp production if actual direct labor hours for the period for small table lamp production is 285,000 would be

• A)$275,000
• B)$285,000
• C)$440,000
• D)$456,000

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Definitions:

Resource Allocation

The process of distributing available resources among various competing needs or uses in order to achieve a desired outcome or optimize efficiency.

Comparative Advantage

An economic theory stating that a country should specialise in producing and exporting goods in which it has a lower opportunity cost than other countries.

Opportunity Cost

Opportunity cost refers to the value of the next best alternative foregone as the result of making a decision.

Corn

A cereal plant that yields large kernels set in rows on a cob, a staple food in many parts of the world.