Question

g Westvaco Inc. manufactures two different sizes of monitors: small and large. Currently, its total manufacturing overhead cost of $80,000 is allocated on the basis of direct labor dollars. Small monitors Large monitors Direct labor hours 6,000 10,000 An ABC analysis shows that its total manufacturing overhead cost is a mixture of batch-level and product line costs. The following information has been assembled regarding overhead. Activity Total overhead Activity measure Small monitors Large monitors Batch-level overhead $50,000 batches 12 batches 38 batches Product line overhead $30,000 Product lines 10 lines 30 lines 1. Determine the total manufacturing overhead for small monitors, using the current cost system. Ans: $________________ total manufacturing overhead for the small monitors

Answer 1

Answer:

Allocated overhead= $30,000

Explanation:

First, we need to calculate the plantwide predetermined overhead rate:

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

Predetermined manufacturing overhead rate= 80,000/16,000

Predetermined manufacturing overhead rate= $5 per direct labor hour

Now, we can allocate overhead to Small Monitors:

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

Small Monitors:

Allocated overhead= 5*6,000= $30,000