Bluefield Crop has two product lines, A and B Bluefield has identified the follo
ID: 2424581 • Letter: B
Question
Bluefield Crop has two product lines, A and B Bluefield has identified the following information about its overhead and potential cost drivers Required : Suppose Bluefield Corp. uses a traditional costing system with number of labor hours as the cost driver Determine the amount of overhead assigned to each product line if Product A requires 70 percent of the labor hours and Product B requires 30 percent Suppose Bluefield uses a traditional costing system with machine hours as the cost driver Determine the amount of overhead assigned to each product line if Product A consumes 17.400 machine hours and Product B consumes 35.600. (Round intermediate calculations to 2 decimal places and your final answer to the nearest whole dollar amount.)Explanation / Answer
1.
Overhead allocation rate= Total overheads / Total number of labour hours
=$87,980/2,200
=$39.99 per hours
Product A requires 70% of labour hours and Product B requires 30% of labour hours
therefore Product A labour hours= 2200*70/100 = 1540 hours
Product B= 2200*30/100= 660
Total overheads cost to Product A = 1540* 39.99=$61,584.6 Rounded to 61585
Total overheads cost to Product B = 660*39.99 =$26,393.3 Rounded to 26393
2.
Overhead allocation rate= Total overheads / Total number of machine hours
= 87980/ 53000
= $1.66
Product A 17400 Machine hours = 17400*1.66 =$28,884
Product B 35600 Machine hours= 35600*1.66= $59,096
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