Question

PA4-3 (Algo) Selecting Cost Drivers, Assigning Costs Using Activity Rates [LO 4-1, 4-3, 4-4, 4-6 ] Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Home Work Direct materials cost per unit $ 39 $ 63 Direct labor cost per unit 23 33 Sales price per unit 354 570 Expected production per month 730 units 470 units Harbour has monthly overhead of $184,260, which is divided into the following cost pools: Setup costs $ 72,540 Quality control 58,520 Maintenance 53,200 Total $ 184,260 The company has also compiled the following information about the chosen cost drivers: Home Work Total Number of setups 37 56 93 Number of inspections 300 365 665 Number of machine hours 1,600 1,200 2,800 Required: 1. Suppose Harbour uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.)

Answer 1

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

Basic production information follows:

Harbour has a monthly overhead of $184,260

The number of machine-hours:

Home: 1,600

Work: 1,200

Total: 2,800

To calculate the allocated overhead, first, we need to calculate the overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 184,260/ 2,800= $65.81 per machine hour

Now we can allocate the overhead using the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Work:

Allocated MOH= 65.81*1,600= $105,296

Home:

Allocated MOH= 65.81*1,200= $78,972