Question

The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $25,500. Additional estimated information is given below.

Totes Satchels
Direct materials cost per unit $34 $40
Direct labor cost per unit $54 $64
Number of units 530 390
Calculate the amount of overhead to be allocated to Totes. (Round any percentages to two decimal places and your final answer to the nearest dollar.)
A) $472
B) $347
C) $11,878
D) $13,620

Answer 1

Allocated to Totes =$ 13,620.94

Step-by-step explanation:

Allocated overhead to totes = OAR × actual direct labour cost

Overhead Absorption Rate(OAR) = Estimated Overhead/Estimated Direct labour cost

Estimated Direct labour cost = (54×530) + (64× 390 )=$53580

OAR = $25,500/$53,580 = 47.59%

Allocated to Totes = 47.59% × (54×530) = 13,620.94

Allocated to Totes =$ 13,620.94