Question

Ashland Corporation estimates its manufacturing overhead costs to be $330,000 and its direct labor costs to be $388,000 for 2020. The actual manufacturing labor costs were $114,000 for Product 1, $171,000 for Product 2 and $194,000 for Product 3 during 2020. Manufacturing overhead is allocated to products on the basis of direct labor costs using a predetermined overhead rate. The actual manufacturing overhead cost for the year was $206,000. The amount of overhead assigned to Product 3 during 2020 was:

Answer 1

the overhead amount assigned to product 3 is $165,000

Step-by-step explanation:

The computation of the overhead amount assigned to product 3 is shown below:

= Actual manufacturing labor cost for product 3 × estimated manufacturing overhead cost ÷ direct labor cost

= $194,000 × $330,000 ÷ $388,000

= $165,000

Hence, the overhead amount assigned to product 3 is $165,000