Question

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SB Angle Max Industries produces a product...
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Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year’s expected costs and activities are shown below.
Assembly Finishing
Direct labor hours 190,000 DLH 149,000 DLH
Machine hours 390,000 MH 95,550 MH
Overhead costs $ 390,000 $ 581,100
TB MC Qu. 17-117 Assume that the Assembly Department allocates...
Assume that the Assembly Department allocates overhead based on machine hours, and the Finishing Department allocates overhead based on direct labor hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.4 machine hours in the Assembly Department, and 4.0 direct labor hours and 0.6 machine hours in the Finishing Department?

Answer 1

Total allocated costs= $19

Step-by-step explanation:

First, we need to calculate the predetermined manufacturing overhead rate for each department:

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

Assembly= 390,000 / 390,000= $1 per machine hour

Finishing= 581,100 / 149,000= $3.9 per direct labor hour

Now, we can allocate overhead:

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

Assembly= 1*3.4= $3.4

Finishing= 3.9*4= $15.6

Total allocated costs= $19