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:

Copper Products

Items or merchandise that are made from copper, including electrical wiring, plumbing materials, and decorative objects.

Pollutants

Substances that contaminate the environment, often resulting from industrial, agricultural, or other human activities, and can harm human health and natural ecosystems.

Declining Benefits

A situation where the additional satisfaction or value derived from using or consuming more of a product decreases.

Perfection

An ideal state where everything meets the highest standards of accuracy or completeness.