EXERCISE 8-6 (30 MINUTES)

12,000 DLHs *

*50,000 units of Model X100 @ 0.2 DLH per unit + 5,000 units of Model

X200 @ 0.4 DLH per unit = 10,000 DLHs + 2,000 DLHs = 12,000 DLHs

Consequently, manufacturing overhead would be applied to the prod-

ucts as follows:

Model X100 Model X200 Total

Unit sales ... 50,000 5,000

Direct labor-hours per unit.... 0.2 0.4

Total direct labor-hours ... 10,000 2,000 12,000

Total manufacturing over-

head applied @ $160 per

direct labor-hour ... $1,600,000 $320,000 $1,920,000

Manufacturing overhead per

unit ... $32 $64

Note that all of the manufacturing overhead cost is applied to the prod-

ucts under the company’s traditional costing system.