Question

Stealth, Inc. produces two types of​ drones, rotary and fixed wing. Stealth estimated $ 1 comma 092 comma 000 of manufacturing​ overhead, and 52 comma 000 machine hours for the year. The allocation base for overhead costs is machine hours. The rotary model actually consumed 25 comma 000 machine​ hours, and the fixed wing type consumed 27 comma 000 machine hours. How much overhead is allocated to the rotary​ model?

Answer 1

Overhead Rate per Machine Hour= Total Overheads/ Total No of Machine Hours

=1092000/52000

=$21 per Machine Hour

Overheads Allotted Rotary Fixed Wing

Machine Hours 25000 27000

Rate Per Hour 21 21

Overheads Allocated $525000 $567000