Question

BlendIn, Inc. manufactures covers for blenders and toaster ovens. Because its product lines are similar, BlendIn can produce most styles in any of its four factories with minimal setup time. In one of its factories, it has incurred indirect labor cost of $125,000, depreciation of $40,000 for corporate computers, and factory rent and utilities of $143,000. BlendIn uses traditional costing. Based on the amounts above, how much should BlendIn allocate to product cost for blender covers? Assume that blender covers account for 55% of production.

Answer 1

Allocated overhead= $147,400

Step-by-step explanation:

Giving the following information:

It has incurred in direct labor cost of $125,000, depreciation of $40,000 for corporate computers, and factory rent and utilities of $143,000.

Assume that blender covers account for 55% of production.

Allocated overhead= total overhead* allocation base

Allocated overhead= (125000 + 143000) * 0.55= $147,400