Wall Nuts, Inc. produces paneling which requires two processes, A and B, to complete. Oak is the best selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown below.
Direct materials $380,000
Direct Labor
Department A (6,000 DLH x $25 per DLH) $150,000
Department B (35,125 DLH x $16 per DLH) $562,000
Machine Hours
Department A 24,000 MH
Department B 32,000 MH
Wall Nuts’ total expected overhead costs and related overhead data are shown below.
Departments. Department A. Department B.
Direct labor hours 67,000 DLH 170,000 DLH
Machine hours 100,000 MH 80,000 MH
Manufacturing overhead costs $450,000 $600,000
Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B.
$4.50 per MH in Dept A; $4.50 per MH in Dept B.
$7.50 per MH in Dept A; $7.50 per MH in Dept. B.
$4.50 per MH in Dept A; $7.50 per MH in Dept B.
$2.70 per MH in Dept A; $6.00 per MH in Dept B.
$0.60 per MH in Dept A; $0.80 per MH in Dept B.