Acompany allocates $7.50 overhead to each unit produced. the company uses a plantwide overhead rate with direct labor hours as the allocation base. given the amounts below, how many direct labor hours does the company expect in department 2?
department 1 : manufacturing overhead costs $74,358
direct labor hours 6,610 dlh and machine hours 700 mh
department 2 : manufacturing overhead costs $49,572
direct labor hours ? ? dlh and machine hours 800 mh
a. 9,914 dlh
b. 6,612 dlh
c. 3,109 dlh
d. 7,454 dlh
e. 16,254 dlh

Option (A) is correct.

Explanation:

Given that,

overhead to each unit produced = $7.50

Department 1:

Manufacturing overhead costs  = $74,358

Direct labor hours (DLH) = 6,610

Machine hours = 700 MH

Department 2 :

Manufacturing overhead costs = $49,572

Machine hours = 800 MH

Total Overheads = Manufacturing overhead cost of department 1 + Manufacturing overhead cost of department 2

                            = $74,358 + $49,572

                            = $123,930

Total Direct Labor Hours:

= 16,524

Direct Labor Hours for Department 2:

= Total Direct Labor Hours - Direct labor hours of department 1

= 16,524 - 6,610

= 9,914 DLH

explanation:

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