Question

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: Regular Supreme Direct labor hours 10,000 15,000 Machine hours 10,000 30,000 Number of parts 90,000 160,000 Overhead applied to Regular using activity-based costing is Group of answer choices

Answer 1

Answer:

Total overhead= $1,290,000

Explanation:

Giving the following information:

Overhead:

Machining= $3,000,000

Assembling= $1,500,000.

Regular Supreme

Machine hours 10,000 30,000

Number of parts 90,000 160,000

First, we need to calculate the predetermined overhead rate per activity:

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

Machining= 3,000,000/ (10,000 + 30,000)= $75 per machine hour

Assembling= 1,500,000/(90,000 + 160,000)= $6 per part

Now, we can allocate overhead to Regular:

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

Machining= 75*10,000= $750,000

Assembling= 6*90,000= $540,000

Total overhead= $1,290,000