Answer:
Explanation:
Machining Department Finishing Department Estimated Manufacturing Overhead by Department $800,000 $200,000
Trail Running Shoes 360,000 machine hours 6,000 direct labor hours Running Apparel 40,000 machine hours 34,000 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 362,000 hours 5,500 hours
Running Apparel 37,000 hours 35,000 hours
How much manufacturing overhead will be allocated to running apparel?
<em><u>For The Overhead Absorption Rate for Machining Department</u></em>
<em>Trail Running Shoes = (360,000/360,000+40,000)* $800,000 = $720,000</em>
<em>Running Apparel = (40,000/360,000+40,000)* $800,000 = $80,000</em>
<em><u>For The Overhead Absorption Rate for Finishing Department</u></em>
<em>Trail Running Shoes = (6,000/6,000+34,000)* $200,000 = $30,000</em>
<em>Running Apparel = (34,000/6,000+34,000)* $200,000 = $170,000</em>
<em><u>Therefore the running department would have been allocated ($80,000+$170,000) which is $250,000 during the period.</u></em>
