Answer:
Allocated MOH= $5,250,000
Explanation:
Giving the following information:
Overhead costs:
Machining = $5,000,000
Assembling= $2,500,000
Regular:
Direct labor hours= 10,000
Machine hours= 10,000
Number of parts= 90,000
Supreme:
Direct labor hours= 15,000
Machine hours= 30,000
Number of parts= 160,000
First, we need to calculate the estimated overhead rate for each department. For Machining, we will use the machine hours. For Assembling, we will use the direct labor hours.
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
<u>Machining:</u>
Estimated manufacturing overhead rate= 5,000,000/ (10,000 + 30,000)= $125 per machine hour
<u>Assembling:</u>
Estimated manufacturing overhead rate= 2,500,000/(25,000)= $100 per direct labor hour
Now, we can allocate overhead to supreme.
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= (125*30,000) + (100*15,000)= $5,250,000
