Question

Machining Machine-hours $ 247,000 13,000 MHs Machine setups Number of setups $ 60,000 150 setups Product design Number of products $ 56,000 2 products Order size Direct labor-hours $ 260,000 10,000 DLHs Activity Measure Product X08R Product P56L Machine-hours 10,000 3,000 Number of setups 110 40 Number of products 1 1 Direct labor-hours 6,000 4,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product P56L?

Answer 1

Answer:

Manufacturing overhead allocated to product P56L   is $249,200

Explanation:

The missing beginning part of the question is as written below

"Bippus Corporation manufactures two products: Product X08R and Product P56L. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X08R and P56L.

Activity Cost Pool    Activity Measure    Total Cost     Total Activity"

Solution

Predetermined overhead rate = Estimated overhead/Estimated direct labor hours

Predetermined overhead rate = (247,000 + 60,000 + 56000 + 260,000) / 10,000

Predetermined overhead rate = 623,000 / 10,000 dhl

Predetermined overhead rate = 62.30 per direct labor hour

Manufacturing overhead allocated to product P56L  

= 4,000 hours * 62.30

= $249,200