Rain Maker Company Uses a Plantwide Overhead Rate with Direct

question 29

Multiple Choice

Rain Maker Company uses a plantwide overhead rate with direct labor hours as the allocation base.Next year, 350,000 units are expected to be produced taking .80 direct-labor hours each.How much overhead will be assigned to each unit produced given the following estimated amounts? $$\begin{array} { l c c } \text { Estimated: } & \text { Department 1 } & \text { Departnent } 2 \\\text { Marufacturing overhead costs } & \$ 2,730,000 & \$ 910,000 \\\text { Direct labor hours } & 168,000 D L H & 112,000 \mathrm { DLH } \\\text { Machine hours } & 30,000 \mathrm { MH } & 7,000 \mathrm { MH }\end{array}$$

• A)$13.00 per unit
• B)$10.40 per unit
• C)$16.25 per unit
• D)$6.50 per unit
• E)$8.13 per unit

Develop skills in analyzing the financial impact of additional processing or alternative use of resources.

Evaluate the profitability of special orders and understand the impact of capacity on production decisions.

Understand the concepts of incremental revenue and incremental costs in the context of special orders.

Recognize the relevancy of cost and revenue information in making outsourcing decisions.

---

Definitions:

Standard of Measurement

A set of criteria or benchmarks used to assess the performance or quality of a product, service, or activity.

Metric

A standard measurement used to quantify and evaluate the effectiveness, performance, or success of an activity or process.

Objectives

Specific, measurable goals or targets designed to direct actions and measure progress towards achieving a broader aim or strategy.

Key Performance Indicators

Quantifiable measures used to gauge the performance of a company, project, or campaign against predefined objectives.