Answer:
The answer is: $500,000
Explanation:
In order to allocate overhead cost we will use the overhead cost per part ratio:
Total overhead cost = $2,000,000
Hammers produced = 300,000 x 2 parts per hammer = 600,000 parts
Screwdrivers produced = 600,000 x 3 parts per hammer = 1,800,000 parts
Total parts involved in the production process = 2,400,000 parts
Overhead cost per part = $2,000,000 / 2,400,000 parts = $0.83 per part
Total overhead cost allocated to the production of hammers = 600,000 parts used in hammer production x $0.83 per part = $500,000
