Question

The company's overhead costs of $108,000 are allocated based on labor cost. Assume 4,000 units of product S and 5,000 units of Product K are produced. What is the total amount of production costs that would be assigned to Product S? (Do not round intermediate calculations.)

Answer 1

Answer: $68,000

Step-by-step explanation:

Hello. Your question was incomplete and lacked details needed to answer so I attached the full question.

The total cost that would be ascribed to Product S would be Direct Materials plus Direct Labour plus Fixed Overhead.

It is said that Overhead is apportioned on the basis of Direct Labour so let us begin with that.

Fixed Overhead for Product S,

12,000 + 24,000 = $36,000 (total direct labour)

Product S accounts for 12,000 out of this so that is

= 12,000/36,000

= 1/3

Product S's proportion of the Fixed Overhead is therefore,

= 1/3 * 108,000

= $36,000

Now that we have the fixed Overhead we can add the rest. Cost of Producing S is,

= 20,000 + 12,000 + 36,000

= $68,000

$68,000 is the total amount of production costs that would be assigned to Product S