Question

Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Direct Labor Hours Per Unit Machine Hours Per Unit Blinks 1,000 4 5 Dinks 2,000 2 8 All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $72,000. Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs based on direct labor hours. The factory overhead allocated per unit of Blinks is a.$37.45 b.$19.50 c.$78.00 d.$56.00

Answer 1

Answer:

The factory overhead allocated per unit of Blinks is b.$19.50

Explanation:

It is Important to note that  Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs based on direct labor hours.

A plant Wide Overhead rate is a function of the Total Overheads of a Company divided by the Total Labor Hours in the Company

Total Overheads:

Fabrication Department  $84,000

Assembly Department     $72,000

Total                                 $156,000

Total Labor Hours :

Fabrication Department                                             0

Assembly Department ( 1,000 × 4) + (2,000×2)     8,000

Total                                                                          8,000

Note :  labor hours take place only in the Assembly Department

Plantwide overhead rate :

Plantwide overhead rate = Total Overheads / Total Labor Hours

                                           =  $156,000 / 8,000

                                           =  $ 19.50

Answer 2

Answer: $19.50

Explanation:

Given the following information about Ramapo company;

RAMAPO COMPANY :

Product Unit Direct-labor-hours

Blink 1000 4

Dink 2000 2

Prooduction is carried out in two departments ;

Fabrication(Machine-hours only)

Assembly department( Labor-hours only).

According to the question, THE COMPANY USES A SINGLE PLANT-WIDE OVERHEAD RATE TO APPLY TO ALL FACTORY OVERHEAD COST BASED OF DIRECT LABOR HOURS

PLANT-WIDE OVERHEAD =

Total factory overhead ÷ total factory direct labor hours

Total factory overhead:

Fabrication department overhead = $84,000

Assembly department overhead = $72,000

Total overhead = $156,000

Factory direct labor-hours :

Total Labor-hours= (unit × direct labor hour(Blink)) + unit × direct labor hour (Dink)

(1000 × 4) + (2000 × 2)= 8000

Plantwide overhead = Total overhead / total direct labor hour

Plantwide overhead cost per unit of Blink= $156,000 ÷ 8000 = $19.50