Question

Big Trail Running Company has started to produce running apparel in addition to the trail running shoes that they have manufactured for years. They feel that a departmental overhead rate would best reflect their overall manufacturing overhead usage. Based on research the following information was gathered for the upcoming year: ​ Machining Department Finishing Department Estimated Manufacturing Overhead by Department $800,000​ $100,000​ Trail Running Shoes 350,000 machine hours 19,000 direct labor hours Running Apparel 50,000 machine hours 61,000 direct labor hours Manufacturing overhead is driven by machine hours for the machining department and direct labor hours for the finishing department. At the end of the year, the following information was gathered related to the production of the trail running shoes and running apparel: ​ Machining Department Finishing Department Trail Running Shoes 352,000 hours 18,500 hours Running Apparel 47,000 hours 62,000 hours How much manufacturing overhead will be allocated to the trail running shoes

Answer 1

Answer:

Total allocated overhead= $903,390

Explanation:

Giving the following information:

Estimated Manufacturing Overhead by Department:

Machining Department $800,000

Finishing Department  ​ $100,000

Estimated Trail Running Shoes:

350,000 machine hours

19,000 direct labor hours

Manufacturing overhead is driven by:

Machine hours for the machining department.

Direct labor hours for the finishing department.

Actual information:

Machine hours= 352000

Direct labor= 18,500 hours

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

Machining= 800,000/350000= $2.29 per machine hour

Finishing= 100,000/19000= $5.26 per direct labor hour

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

Machining= 2.29*352000= $806,080

Finishing= 5.26*18500= $97,310

Total allocated overhead= $903,390