Greene Company Uses a Plantwide Overhead Rate with Direct Labor

question 152

Multiple Choice

Greene Company uses a plantwide overhead rate with direct labor hours as the allocation base.Use the following information to solve for the amount of direct labor hours estimated per unit of product G2.
$\begin{array}{lr}\text { Direct material cost per unit of G2 } & \$ 7 \\\text { Total estimated manufacturing overhead } & \$ 795,000 \\\text { Total cost per unit of G2 } & \$ 20 \\\text { Total estimated direct labor hours } & 530,000 \\& \text { DLH } \\\text { Direct labor cost per unit of G2 } & \$ 3.70\end{array}$

• A) 1.5 DLH per unit of G2.
• B) 6.2 DLH per unit of G2.
• C) 9.3 DLH per unit of G2.
• D) .66 DLH per unit of G2.
• E) 14.09 DLH per unit of G2.

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Definitions:

FIFO Method

"First In, First Out" method of inventory valuation where the oldest inventory items are recorded as sold first, potentially impacting cost of goods sold and ending inventory valuation.

Equivalent Unit

A concept used in cost accounting to express the amount of materials, labor, and overhead costs assigned to finished units and units in progress as a total number of finished units.

Hybrid Costing System

A costing method that combines elements of both job costing and process costing systems, typically used for products that require a mix of standardized and customized production processes.

Labor Flow

This refers to the movement of employees or workforce within a company, industry, or between jobs, including their utilization and productivity.