Departmental overhead rates LO P2 Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for this year follow. (Round "OH rate and cost per unit" answers to 2 decimal places.) Direct Labor hours Machine hours Overhead costs Molding Trimming 52,000 DLH 48,000 DLH 30.500 MH3 , 600 MH 6752,000 $612,000 Data for two special-order parts to be manufactured by the company in this year follow: N Part 270 9.300 units Part XB2B 54,500 units ot units Machine Tours Maldin Terming Direct labor hours Molding Trening 5,100 MH 2.600 MIL 1.020 MH 650 MH 5,500 DL 700D 2,150 DLH , 500D
Required:
1. Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. Molding 01 Trimming
2. Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1,
3. Determine the overhead cost per unit.

1-Departmental Overhead Rate Molding $ 221.38 per machine hour

Trimming Department $ 12.75 per DLH

2- Total overhead cost $140 8395.6

3- Overhead cost per unit.

$ 112.36  per unit of  N Part 270

$ 4.96 per unit of Part XB2B

Explanation:

               Direct Labor hours         Machine hours        Overhead costs

Molding   52,000 DLH                    30,500 MH              6752,000

Trimming  48,000 DLH                   3 , 600 MH               $612,000

Total         100,000 DLH                   34,100 MH               $7364,000

                     N Part 270               Part XB2B

Units             9,300                           54,500  

Machine Hours

Molding        5,100                           1.020

Trimming     2,600                          650

Direct Labor Hours

Molding         5,500                       2150

Trimming       700                            3,500

We divide the Costs with the cost drivers to get the rates.

1-Departmental Overhead Rate

1) Molding Department = Overhead Costs/ Machine Hours

                                  = 6752,000/ 30,500= $ 221.377= $ 221.38 per machine hour

2) Trimming Department= Overhead Costs/ Direct Labor Hours

                               =$612,000 /48,000 DLH  = $ 12.75 per DLH

Now we multiply the cost drivers with the rates to get the overheads costs.

2- Total overhead cost= $ 1137963 + $ 270432.6= $140 8395.6

N Part 270  =$ 1129038 + $ 8925= $ 1137963

Molding = $ 221.38 *5,100   = $ 1129038

Trimming= $ 12.75 *700= $ 8925

Part XB2B= $ 225807.6 + $ 44625= $ 270432.6

Molding= $ 221.38 *1020 = $ 225807.6

Trimming= $ 12.75 *3500= $ 44625

We divide the overhead cost for each product with the number of units to get the unit costs.

3-  Total Overhead Rate  N Part 270 = Total Overhead Cost/ Units Produced

                                      =$ 1137963 / 9300     = $ 112.36  per unit of  N Part 270

Total Overhead Rate Part XB2B = Total Overhead Cost/ Units Produced

                                   =$ 270432.6/54,500= $ 4.96 per unit of Part XB2B

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30