Question

The controller of Hendershot Corporation 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 Windows Total expected units produced 13,400 1,320 Total expected material moves 1,340 1,220 Expected direct labor-hours per unit 6 8 The total materials handling cost for the year is expected to be $16,652.90. If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the specialty windows is closest to: (Round your intermediate calculations to 4 decimal places.)a. $12,888
b. $14,721
c. $9,560
d. $7,911

Answer 1

Answer:

$1,933.32

Explanation:

Total materials handling cost for the year = $16,652.90

Total direct labor hours:

= [(Total expected units produced for wall mirrors × Expected direct labor hours per unit for wall mirrors) + (Total expected units produced for Specialty Windows × Expected direct labor hours per unit for Specialty Windows)]

=  [(13,400 × 6) + (1,320 × 8)]

= 80,400 + 10,560

= 90,960

Cost per Direct labor hour:

= Total Expected material handling cost ÷ Total direct labor hours

= $16,652.90 ÷ 90,960

= $0.18308

Material handling Cost allocated to specialty windows:

= Cost per Direct labor hour × Direct labor Hours

= $0.18308 × (1,320 × 8)

= $0.18308 × 10,560

= $1,933.32

Therefore, the total materials handling cost allocated to the specialty windows is closest to $1,933.32 .