X Company has two production departments, 1 and 2. Listed below are budgeted inf
ID: 2424747 • Letter: X
Question
X Company has two production departments, 1 and 2. Listed below are budgeted information for the two departments, and actual information for one of its products, Product X: Department 1 All Products Product X Overhead $6,400,000 - Direct labor $800,000 $13,696 Direct labor hours 50,000 856 Machine hours 100,000 1,030 Units produced 50,000 690 Department 2 Overhead $1,900,000 - Direct labor $800,000 $3,312 Direct labor hours 50,000 207 Machine hours 120,000 800 Units produced 48,000 690 3. Using a plantwide allocation system with machine hours as the cost driver, what was the allocation to Product X [round overhead rates to the nearest cent]? Tries 0/3 4. Using a departmental allocation system with direct labor hours as the cost driver in Department 1 and machine hours as the cost driver in Department 2, what was the allocation to Product X [round overhead rates to the nearest cent]?
Explanation / Answer
Answer:3
Pre determined overhead rate=Total Overhead cost/Total machine hours
=($64,00,000+$1900000)/(100000+120000)
=37.73 per machine Hour
Allocation to Product X=[1030 hours*$37.73+800*$37.73)
=$38861.9+30184
=$69045.9
Answer:4 Department 1:
Total overhead cost/Direct labor hours
=6400000/50000=$128 per DLH
Allocation to Product X=856 hours*$128=$109568
Department 2:
Total overhead cost/Machine hours
=1900000/120000
=$15.83 per MH
Allocation to Product X=800*$15.83
=12664
Total=12664+$109568
=$122232
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.