# Accounting assessment

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Answers to Question a) The two feasible overhead rates for the year are either the Direct Labor Hours Rate (DLHR) or the Machine Hour Rate (MHR).
DLHR = (Total manufacturing overhead/Direct labor hours)
= (40+200+38+4+6+600+130+402+100), 000/ (100,000)
= 1520000/100000
= 15.2 pounds per DLH
MHR= (1520000/90000)
= 16.9 pounds per MH
(b) The full costing for order No. 101 using each of the rates will be as follows.
Based on DLHR = (15.2*4000) pounds
= 60,800 pounds
Therefore. Raw Material…… 5000
DLC…………….. 60,800
65,800 pounds
Based on MHR = (16.9*1900) pounds
= 32110 pounds
Therefore. Raw Material….. 5000
MHC…………… 32110
37110 pounds
(c.) In the application of a manufacturing burden to product, a cost accounting consideration is made based on direct labor hours, direct labor cost, machine hours and units of the product. The discussion of the direct labor hours is normally rampant as opposed to machine hours. This is because machine hours are used where machine activity is the predominant feature of the operation that is to mean, that the factory departments are mainly composed of machines (Bhimani 2012). Our case in point is predominated by labor hours as opposed to machine operations. therefore, the use of machine hours rate will give us inaccurate cost calculation, which would result into inappropriate burden on the products. Therefore, Direct Labor Hours Rate (DLHR) is preferred for use in calculation the full cost of production.
Costs based on DLH solely depends on how human labor is handled hence to improve on such costs, the direct human labor must be accorded the welfare it deserves so that they are efficient in their operations. Costs based on machine hours on the other hand can be managed based on how efficient and effective the machines are allowed to operate hence reducing the costs or making them manageable. If these costs are not improved, they may inflate cutting into the returns of the operations.