Question

A company makes two products 1 and 2. The finishing activity pool has estimated manufacuring costs of $83,850 and the cost drivers for Product 1 is 322 and 240 for Product 2. The assembling activity pool has estimated costs of $73,925 and the cost drivers for Product 1 is 200 and 300 for Product 2. Direct labor hours for Product 1 is 522and 135 for Product 2. What is the total manufacturing overhead cost to be assigned to Product 1 using a single overhead rate as under tradional cost accounting? Round your final answer to the nearest whole dollar and do not put a dollar sign in your answer.

Answer 1

Product 1 Costing Summary

Finishing Activity($149 ×322) 47,978

Assembling Activity($113 × 522) 67,426

Total 117,404

Therefore Total Manufacturing overheads are 117,404

Step-by-step explanation:

The traditional cost accounting apportions the overhead cost to the products according to specific units of the department`s cost driver used by the product.

Finishing Activity

Absorption Rate=Total Manufacturing Costs/Total Cost Driver Activity

= $ 83,850/ (322+240)

= $149 / product

Assembling Activity

Absorption Rate=Total Manufacturing Costs/Total Cost Driver Activity

= $ 73,925/ (522+135)

= $113 / labor hour