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29 April, 19:55

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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  1. 29 April, 20:22
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    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
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