Problem

The Kaumajet Factory produces two products-table lamps and desk lamps. It has two separate departments-Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours.

If the budget estimates that a desk lamp will require 1 hour of finishing and 2 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours if 26,000 units are produced?

a $540,000
b $187,200
c $475,000
d $288,600.