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Gentry Cabinetry Produces Two Models of Home Shelving, the Basic

Question 4

Essay

Gentry Cabinetry produces two models of home shelving, the Basic and the Mega. Data on operations and costs for November are:
 Basic  Mega  Total  Machine hours 8,0004,00012,000 Direct labor hours 6,0004,00010,000 Units produced 1,0002501,250 Direct material costs $20,000$7,500$27,500 Direct labor costs 129,00071,000200,000 Manufacturing overhead costs348,200 Total costs$575,700\begin{array}{lrrr}&\text { Basic } & \text { Mega } & \text { Total }\\ \text { Machine hours } & 8,000 & 4,000 & 12,000 \\\text { Direct labor hours } & 6,000 & 4,000 & 10,000 \\\text { Units produced } & 1,000 & 250 & 1,250\\\text { Direct material costs } & \$ 20,000 & \$ 7,500 & \$ 27,500 \\\text { Direct labor costs } & 129,000& 71,000 & 200,000\\\text { Manufacturing overhead costs}&&&348,200\\\text { Total costs}&&&\$575,700\end{array}

Required:
Compute the predetermined overhead rate, assuming Gentry Cabinetry uses:
(a) Direct labor hours to allocate overhead costs.
(b) Direct labor costs to allocate overhead costs.
(c) Machine hours to allocate overhead costs.
(d) Compute the unit cost for each model using direct labor costs to allocate overhead.

Correct Answer:

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(a)$348,200 / 10,000 hrs = $34.82/hr
(b)...

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