Question

Channing uses a two-stage cost allocation system, It uses direct-material costs to allocate direct-materials related overhead and direct-labor costs to allocate direct-labor related overhead costs. a. Compute the direct-material related overhead rate for next month. b. Compute the direct-labor related overhead rate for next month. c. What is the total overhead allocated to product A1 next month? d. What is the total overhead allocated to product B2 next month?

Answer 1

Answer:A)4.17 per direct material

B)3.85 per direct labor

C)843087 .5

D)421,125.75

Step-by-step explanation:

We were given some information

Channing makes use of a two-stage cost allocation system

1) It makes use of direct-material costs to allocate direct-materials related overhead costs

2) It makes use of direct labor costs to allocate direct-labor related overhead costs.

For A1 For B2

Direct material=75,000 and 150,000

Direct labor =58,000 and 137,750

Overhead =54,000 for direct material related and 50,895 for direct labor related.

For A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 225,000/54000= 4.17 per direct material

For B) Estimated manufacturing overhead rate= 195,750/50895= 3.85 per direct labor

C) The formula for allocated Manufacturing overhead rate= Estimated manufacturing overhead rate *Actual amount of allocation base

Therefore

Allocated manufacturing overhead rate for (A1)= (4.17*75000 )+ (3.85*1377550)= 843,087.5

D) Allocated manufacturing overhead rate for (B2)= (4.17*54000) + (3.85*50895)= 421,125.75