two departments, and actual information for one of its products, Product 1: 1. U

Question

two departments, and actual information for one of its products, Product 1:

1. Using a plantwide allocation system with machine hours as the cost driver, what was the allocation to Product 1 [round overhead rates to the nearest cent]?

Please help me. This is the only problem I can't get.

Department X All Products Product 1    Overhead $6,800,000    -          Direct labor $680,000    $13,583        Direct labor hours 40,000    799        Machine hours 110,000    1,100        Units produced 60,000    860     Department Y    Overhead $2,100,000    -          Direct labor $850,000    $4,879        Direct labor hours 50,000    287        Machine hours 120,000    890        Units produced 35,000    860    

Explanation / Answer

Statement showing computations Particulars Amount Overhead in Deptt X          6,800,000.00 Overhead in Deptt Y          2,100,000.00 Total Overhead          8,900,000.00 Machine hours in Deptt X              110,000.00 Machine hours in Deptt Y              120,000.00 Total Machine hours              230,000.00 Plant Wide Overhead Rate = 8,900,000/230,000                        38.70 Calculation of Overhead Allocated to Product1 Overhead in Deptt X   = 1100 *38.70                42,570.00 Overhead in Deptt Y = 890 *38.70                34,443.00 Total Overhead to Product 1                77,013.00

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