Rain Maker Company Uses a Plantwide Overhead Rate with Direct

question 60

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?
$$\begin{array} { l c c } \text { Estimated: } & \text { Department 1 } & \text { Department } 2 \\\text { Manufacturing overhead costs } & \$ 2,730,000 & \$ 910,000 \\\text { Direct labor hours } & 168,000 \mathrm { D L H} & 112,000 \mathrm { DLH } \\\text { Machine hours } & 30,000 \mathrm { MH } & 7,000 \mathrm { MH }\end{array}$$

• 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

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Definitions:

Minimum Lease Payments

The least amount of payments over the leasing period, including any residual value, guaranteed by the lessee under a lease agreement.

Unearned Interest

Interest that has been collected on a loan by a lender but not yet earned, usually because the loan has not reached its maturity.

Lessor's Financial Statements

Financial documents provided by the owner (lessor) reflecting the financial health and performance of assets leased out.

Contra-Asset

A contra-asset account is a negative asset account that offsets the balance on the asset account with which it is paired.