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Kaumajet Factory produces two products: table lamps and desk lamps
Kaumajet Factory produces two products: table lamps and desk lamps. It has two separate departments: Fabrication and Assembly. The factory overhead budget for the Fabrication Department is $441,000, using 294,000 direct labor hours. The factory overhead budget for the Assembly Department is $421,696, using 59,900 direct labor hours.
If a table lamp requires 4 hours of fabrication and 7 hour of assembly, the amount of factory overhead that Kaumajet Factory will allocate to each unit of table lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours is
a.$14.40
b.$7.04
c.$158.41
d.$55.28
Expert Solution
Computation of the overhead rate for table lamp:-
Factory overhead rate for fabrication department = Factory overhead budget / Direct labor hours
= $441,000 / 294,000
= $1.50 per hour
Factory overhead rate for assembly department = Factory overhead budget / Direct labor hours
= $421,696 / 59,900
= $7.04
Overhead rate for table lamp = 4 hours of fabrication department + 7 hour of assembly department
= (4 * $1.50) + (7 * $7.04)
= $6 + $49.28
= $55.28
correct option is d). $55.28
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