Avella, Inc., manufactures and sells two products: Product C2 and Product T1. Da

Question

Avella, Inc., manufactures and sells two products: Product C2 and Product T1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

The company's expected total manufacturing overhead is $775,069.

If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product T1 would be?

Explanation / Answer

Calculate overhead rate :

Overhead rate = 775069/6225 = 124.51 per labour hour

Overhead assigned to product T1 = 124.51*5600 = 697250.83

f the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product T1 would be = 697250.83/800 = $871.56

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