Question

g Foxx Company incurs $330000 overhead costs each year in its three main departments, setup ($15000), machining ($225000), and packing ($90000). The setup department performs 40 setups per year, the machining department works 5000 hours per year, and the packing department packs 500 orders per year. Information about Foxx’s two products is as follows: Product A1 Product B1 Number of setups 20 20 Machining hours 1000 4000 Orders packed 150 350 Number of products manufactured 600 400 Using ABC, how much overhead is assigned to Product A1 each year? $250500 $165000 $79500 $66000

Answer 1

Answer:

Total allocated costs= $79,500

Explanation:

First, we need to calculate the allocation rates:

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

setup= 15,000/40= $375 per setup

machining= 225,000/5,000= $45 per hour

packing= 90,000/500= $180 per order

Now, we can allocate costs to Product A1:

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

setup=375*20= 7,500

machining= 45*1,000= 45,000

packing= 180*150= 27,000

Total allocated costs= $79,500