Question

Ben gordon, inc. manufactures 2 products, wheels and seats. the company has estimated its overhead in the assembling department to be $660,000. the company produces 300,000 wheels and 600,000 seats each year. each wheel uses 2 parts, and each seat uses 3 parts. how much of the assembly overhead should be allocated to wheels?

Answer 1

The number of parts used for the wheels is,
(300,000 wheels) x (2 parts/wheel) = 600,000
For the seats,
(600,000 seats) x (3 parts/seat) = 1,800,00
From the calculation above, the ratio of wheels to total number of parts is 0.25 which means that the overhead allocated for the wheels should be equal to $165,000. The rest of the money should be for Sam, totaling to $495,000.