Outer Limits, Inc Outer Limits' Total Expected Overhead Costs and Related Overhead Data

Essay

Outer Limits, Inc.produces fencing units which require two processes, A and B, to complete.The best-selling type of fence is made of pvc.Information related to the 8,000 units of pvc fencing produced annually is shown below.
$\begin{array}{|l|r|}\hline \text { Direct materials } & \$ 450,000 \\\hline \text { Direct labor } & \\\hline \text { Department A }(5,000 \text { DLH x } \$ 23 \text { per DLH }) & \$ 115,000 \\\hline \text { Department B (4,000DLH x } \$ 25 \text { per DLH }) & \$ 100,000 \\\hline \text { Machine hours } & \\\hline \text { Department A } & 2,000 \mathrm{MH} \\\hline \text { Department B } & 3,000 \mathrm{MH} \\\hline\end{array}$ Outer Limits' total expected overhead costs and related overhead data are shown below.The company uses departmental overhead rates based on machine hours in department A and direct labor hours in department B.
$$\begin{array} { | l | r | r | } \hline & \text { Department A } & \text { Department B } \\\hline \text { Direct labor hours } & 9,000 \mathrm { DLH } & 7,000 \mathrm { DLH } \\\hline \text { Machine hours } & 6,500 \mathrm { MH } & 13,000 \mathrm { MH } \\\hline \begin{array} { l } \text { Manufacturing overhead } \\\text { costs }\end{array} & \$ 54,600 & \$ 67,060 \\\hline\end{array}$$ Determine the total amount of overhead assigned to each unit of pvc fencing.