sleep-tight manufactures mattresses for the hotel industry. it has two products,
ID: 2345902 • Letter: S
Question
sleep-tight manufactures mattresses for the hotel industry. it has two products, down and firm and total overhead of 474000. the company plans to manufacture 400 downy mattresses and 100 firm mattresses this year. in manufacturing the mattresses, the company must perform 600 material moves for the downy and 400 for the firm. it processes 900 purchase orders for the downy and 700 for the firm. the companys employee work 1400 direct labor hours on the downy product and 3400 on the firm. sleep tights total material handling costs are 300000 and its total purchasing costs are 174000 using abc how much overhead would be assigned to the downy product?237,000
277,875
196,125
335,750
please explain how you got the answer. thanks.
Explanation / Answer
overhead = 474,000 material handling: 300,000 300,000/1,000 = $300 per material move purchasing costs: 174,000 174,000/1,600 = $108.75 per purchase order overhead assigned to Downy: material handling 600*300 = $180,000 purchasing: 900*108.75 = $97,875 Total = 180,000 + 97,875 = $277,875 answer: $277,875
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