Question

The controller of Hallowell Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:Wall Mirrors Specialty WindowsTotal expected units produced 2,000 7,000Total expected material moves 100 600Expected DL Hours per unit 7 4The total materials handling cost for the year is expected to be $18,257.40If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the wall mirrors? (Round off your answer to the nearest whole dollar.)

Answer 1

Allocated MOH= $6,085.8

Step-by-step explanation:

Giving the following information:

Wall Mirrors Specialty Windows

Total expected units produced 2,000 7,000

Expected DL Hours per unit 7 4

The total materials handling cost for the year is expected to be $18,257.40

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 18,257.4 / (2,000*7 + 7,000*4)

Predetermined manufacturing overhead rate= 18,257.4 / 42,000

Predetermined manufacturing overhead rate= $0.4347 per direct labor hour

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 0.4347*(2,000*7)

Allocated MOH= $6,085.8