Outer Limits, Inc Outer Limits' Total Expected Overhead Costs and Related Overhead Data

question 53

Essay

Outer Limits, Inc.produces fencing units which require two processes, A and B, to complete.The best-selling type of fence is made of pvc.Information related to the 8,000 units of pvc fencing produced annually is shown below.
$\begin{array}{|l|r|}\hline \text { Direct materials } & \$ 450,000 \\\hline \text { Direct labor } & \\\hline \text { Department A }(5,000 \text { DLH x } \$ 23 \text { per DLH }) & \$ 115,000 \\\hline \text { Department B (4,000DLH x } \$ 25 \text { per DLH }) & \$ 100,000 \\\hline \text { Machine hours } & \\\hline \text { Department A } & 2,000 \mathrm{MH} \\\hline \text { Department B } & 3,000 \mathrm{MH} \\\hline\end{array}$ Outer Limits' total expected overhead costs and related overhead data are shown below.The company uses departmental overhead rates based on machine hours in department A and direct labor hours in department B.
$$\begin{array} { | l | r | r | } \hline & \text { Department A } & \text { Department B } \\\hline \text { Direct labor hours } & 9,000 \mathrm { DLH } & 7,000 \mathrm { DLH } \\\hline \text { Machine hours } & 6,500 \mathrm { MH } & 13,000 \mathrm { MH } \\\hline \begin{array} { l } \text { Manufacturing overhead } \\\text { costs }\end{array} & \$ 54,600 & \$ 67,060 \\\hline\end{array}$$ Determine the total amount of overhead assigned to each unit of pvc fencing.

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Definitions:

Positive Feedback

A biological process where the product of a reaction leads to an increase in that reaction, amplifying the response.

Pleural Cavity

The slim space between the pleura of the lungs and the internal chest wall, containing pleural fluid to reduce friction during breathing.

Pericardial

Related to the pericardium, the membranous sac enclosing the heart and the roots of the great vessels.

Mediastinum

An anatomical region in the chest situated between the lungs, containing the heart, thymus, parts of the esophagus, and trachea.