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:

Payments For Capital

Funds disbursed to acquire or maintain fixed assets, like equipment or buildings, or to compensate the providers of financial capital.

Interest

The charge for borrowing money, typically expressed as an annual percentage of the principal.

Credit

The trust which allows one party to provide resources to another party wherein the second party does not reimburse the first party immediately but promises to do so in the future.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, typically corporate or governmental.