Question

Scoresby Co. uses 3 machine hours and 1 direct labor hour to produce Product X. It uses 4 machine hours and 8 direct labor hours to produce Product Y. Scoresby's Assembly and Finishing Departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products?(A) Product X = $720; Product Y = $1,280(B) Product X = $1,600; Product Y = $4,800(C) Product X = $880; Product Y = $2,240(D) Product X = $400; Product Y = $400

Answer 1

Answer:

(C) Product X = $880; Product Y = $2,240

Explanation:

The applied overhead will be calculate by the product of the cost diver and the overhead rate:

Cost driver for each product:

Product X   3MH and  1LH

Product Y   4MH and 8LH

Overhead rate:

240 per machine hour

and 160 per labor hour

Product X   3MH x $240 +  1LH x $160   = 880

Product Y   4MH x $240 +  8LH x $160  = 2,240