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 - Labor Hours Per Unit - Machine Hours Per UnitBlinks - 1,100 - 4 - 7Dinks - 1,949 - 8 - 9All of the machine hours take place in the Fabrication department, which has an estimated overhead of $95,600. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $106,900.The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Blinks?a. $427.62b. $26.38c. $40.52d. $81.03

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facundobuzzetti facundobuzzetti · Answer 1 · 2020-03-10T13:50:59+01:00

Answer:

The correct answer is C.

Explanation:

Giving the following information:

Product:

Blinks:

Number of units=1,100

Labor hours per unit=4

Machine hours= 7 per unit

Dinks:

Number of units= 1,949

Labor hours per unit= 8

Machine hours= 9 per unit

Total overhead:

Fabrication= 95,600

Assembly= 106,900

Total= $202,500

First, we need to calculate the estimated overhead rate. To do that, we need to determine the total amount of direct labor hours.

Direct labor hours= 1,100*4 + 1,949*8= 19,992 hours

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 202,500/19,992= $10.13 per unit

Now, we can allocate overhead to Blinks:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 10.13*4= $40.52