Windsor Co. incurs $1092750 of overhead costs each year in its three main depart

Question

Windsor Co. incurs $1092750 of overhead costs each year in its three main departments, machining ($620000), inspections ($310000) and packing ($162750). The machining department works 4000 hours per year, there are 600 inspections per year, and the packing department packs 1000 orders per year. Information about Windsor’s two products is as follows: Product X Product Y Machining hours 1000 3000 Inspections 100 500 Orders packed 350 650 Direct labor hours 1700 1800 If traditional costing based on direct labor hours is used, how much overhead is assigned to Product X this year?

Explanation / Answer

Predetermined Overhead Rate using the  traditional costing = Total Overheads / Total direct labor hours

= $ 1,092,750 / ( 1700 + 1800)

= $ 312.2142857

The overhead assigned to Product X this year= Predetermined Overhead Rate * Total direct labor hours of Product X

= $ 312.2142857 * 1700 Hours

= $ 530,764.2857

Hence the correct answer is $ 530,764.29

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.