Question

Ben Gordon, Inc. manufactures 2 products, wheels and seats. The company has estimated its overhead in the assembling department to be $420000. The company produces 300000 wheels and 600000 seats each year. Each wheel uses 2 parts, and each seat uses 3 parts. How much of the assembly overhead should be allocated to wheels?

Answer 1

$41,250

Step-by-step explanation:

Given the following :

Total estimated overhead = $420,000

Number of wheels produced = 300,000 ; uses 2 Parts

Number of seats produced = 600,000 ; uses 3 parts

Number of wheels * part = (300,000 * 2) = 600,000

Number of seats * part = (600,000 * 3) = 1,800,000

Total = 600,000 + 1,800,000 = 2,400,000

Allocated overhead for wheels :

[wheels total / (wheels total + seat total)] * estimated overhead

(600,000 / 2,400,000) * $165,000

0.25 * $165,000

= $41,250