Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Handbags = 60,000 units, 3 hours of direct labor
Moccasins= 40,000 units, 2 hours of direct labor
Total Budgeted factory overhead cost = $360,000
Cutting:
The cutting department has a factory overhead budget of $80,000. Each unit will require 1 direct labor hour or a total of 100,000 direct labor hours.
Sewing:
The Sewing Department estimates factory overhead for $280,000. Handbags require 2 hours of sewing time and Moccasins require 1 hour for a total of 160,000 labor hours.
First, we will calculate the predetermined overhead rate for each department.
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Cutting:
Estimated manufacturing overhead rate= 80,000/100,000= $0.8 per direct labor hour
Sewing:
Estimated manufacturing overhead rate= 280,000/160,000= $1.75 per direct labor hour.
Now, we can allocate the overhead based on direct labor hours:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Handbags:
Cutting= 60,000 units* 1 hour= 60,000 hours
Sewing= 60,000 units* 2 hour= 120,000 hours
Allocated MOH= 60,000*$0.8 + 120,000*1.75= $258,000
Mocassins:
Cutting= 40,000 units* 1 hour= 40,000 hours
Sewing= 40,000 units* 1 hour= 40,000 hours
Allocated MOH= 40,000* 0.8 + 40,000*1.75= $102,000
