Answer:
Channing Corporation
a. The direct-material related overhead rate = $0.22
b. The direct-labor related overhead rate = $0.22
c. The total overhead allocated to product A1 next month = $26,100
Explanation:
a) Data and Calculations:
Products A1 B2 Total
Total Revenue $ 170,000 $ 510,000 $ 680,000
Direct material 65,000 130,000 195,000
Direct labor 54,000 128,250 182,250
Overhead:
Direct-material related 42,900
Direct-labor related 40,095
Total overhead $82,995
a. Direct-material related overhead rate:
Overhead = $42,900
Total direct materials costs = $195,000
Overhead rate = $42,900/$195,000 = $0.22
b. Direct-labor related overhead rate:
Overhead = $40,095
Total direct labor costs = $182,250
Overhead rate = $40,095/$182,250 = $0.22
c. Total overhead allocated to product A1:
Direct materials related overhead = $14,300 ($0.22 * $65,000)
Direct labor related overhead = 11,800 ($0.22 * $54,000)
Total overhead allocated = $26,100
