Question

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead:

Overhead Cost Pool Budgeted Overhead Cost Budgeted Level for Cost Driver Overhead Cost Driver
Materials handling $ 160,000 3,200 pounds
Weight of materials Machine setup 13,260 390 setups
Number of setups Machine repair 1,380 30,000 machine hours
Machine hours Inspections 10,560 160 inspections
Number of inspections
Requirements for Job #971 which manufactured 4 units of product:
Direct labor 20 hours
Direct materials 130 pounds
Machine setup 30 setups
Machine hours 15,000 machine hours
Inspections 15 inspections
Using ABC, the materials handling overhead cost assigned to Job #971 is:_______
a. $2,300
b. $990
c. $6,500
d. $690
e. $1,020

Answer 1

Allocated overhead= $6,500

Step-by-step explanation:

Giving the following information:

Estimated overhead costs:

Materials handling $ 160,000 3,200 pounds

Requirements for Job #971

Direct materials 130 pounds

First, we need to calculate the activity rate for material handling:

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

Material handling= 160,000 / 3,200

Material handling= $50 per pound

Now, we can allocate overhead costs to Job 971:

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

Allocated overhead= 50*130

Allocated overhead= $6,500