Question

Hartley Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20,000 units annually. Planter is a low-volume item totaling only 6,000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32,000 (20,000 + 12,000). Expected annual manufacturing overhead costs are $960,000. Hartley uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of __________.a. $32 b. $53c. need more information to compute d. $26

Answer 1

Answer:

Each unit of planter will be 60

Explanation:

Flowers have high volume item which totals 20,000 units annually

20,000 labor hours

Planter has low volume item totals only 6,000 units per year

So, 2 hours will be 12,000

Aggregate overhead cost amounts to $960,000

Overhead per labor hour = Aggregate overhead cost / annual direct labor hours

= $960,000 / 32,000

= 30

Therefore, each unit of planter overhead will be:

= Overhead per labor hour × 12,000 / Total units

= 30 × 12,000 / 6,000

= 360,000 / 6,000

= 60

Note: The correct option is missing.