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 $489,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 46,000 units of Big Z and 23,000 units of Little Z next year. Direct Material per Unit Direct Labor Dollars per Unit Big Z $ 20 $ 19 Little Z $ 26 $ 16 What are total estimated direct labor hours for this next year?

Question

Business

Leo Singh

19 July, 18:18

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 $489,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 46,000 units of Big Z and 23,000 units of Little Z next year. Direct Material per Unit Direct Labor Dollars per Unit Big Z $ 20 $ 19 Little Z $ 26 $ 16 What are total estimated direct labor hours for this next year?

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Answers (1)

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Wolfgang · Answer 1

Total direct labor hours = 62,100 hours

Explanation:

Giving the following information:

We know that the direct labor hour costs $20. And that Big Z will produce 46000 units using $19 of direct labor per unit. Also, Little Z will produce 23000 units using $16 direct labor per unit.

Direct labor hours=?

$20 = 1 hour

$1=? = (1*100/20) = 5% = 3 minutes

One unit of Big Z uses:

19*3' = 57 minutes

46000 units = (46000*57) / 60 = 43,700 hours

One unit of Little Z:

16*3' = 48 minutes

23000 units = (23000*48) / 60' = 18,400 hours

Total direct labor hours = 62,100 hours