Question

Kamper Company sells two products Big Z and Little Z. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $482,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $25 per hour and the company expects to manufacture 39,000 units of Big Z and 16,000 units of Little Z next year.



Direct Material per Unit Direct Labor Dollars per Unit
Big Z $13 $19
Little Z $19 $15

What are total estimated direct labor hours for this next year?

39,240 total DLH.

981,000 total DLH.

526,316 total DLH.

1,870,000 total DLH.

1,507,316 total DLH.

Answer 1

Answer:

Explanation:

Big Z:

(a) Direct Labor $ per Unit = 19

(b) Direct Labor $ per hour = 25

(c ) Hour per unit(a/b) = 19/25 = 0.76

(d) Units in next year = 39,000

( e) Total hours (c*d)  = 0.76*39,000 = 29,640

Little Z:

(a) Direct Labor $ per Unit = 15

(b) Direct Labor $ per hour = 25

(c ) Hour per unit(a/b) = 15/25 = 0.60

(d) Units in next year = 16,000

( e) Total hours (c*d)  = 0.60*16,000= 9,600

Total estimated direct labor hours for this next year = 29,640+9600 = 39,240