Question

X Company has two production departments, A and B. The following is budgeted information for all of its products in 2019, and actual information for one of them, Product X:
Department A All Products Product X
Overhead $4,300,000 --
Direct labor hours 50,000 724
Machine hours 110,000 1,000
Units produced 54,000 590
Department B
Overhead $2,200,000 --
Direct labor hours 60,000 157
Machine hours130,000 880
Units produced 40,000 590
Required:
a. Using a single-driver allocation system, with direct labor hours as the driver, how much overhead was allocated to Product X [round overhead rate(s) to two decimal places]?

Answer 1

Answer:

Explanation:

Overhead allocated to Product X = Department A overhead cost+ Department B overhead cost

=  $51,157.84+$5755.62=

= $56,913

Calculations:

Using a single-driver allocation system, with direct labor hours as the driver, how much overhead was allocated to Product X:

Department A's Overhead rate per labor hour = Overhead costs/Total direct labor hours  = $4300000/60000 hours = $71.66 per hour

Overhead (Department A) = $71.66per hour*724 labor hours

= $51,157.84

Department B's Overhead rate per labor hour = Overhead costs/Total direct labor hours  = $2200000/60000 hours = $36.66 per hour

Overhead (Department A) = $36.66 per hour*157 labor hours

= $5755.62