Yang Manufacturing Company manufactures two products (A and B). The overhead cos
ID: 2575451 • Letter: Y
Question
Yang Manufacturing Company manufactures two products (A and B). The overhead costs (£60,000) have been divided into three cost pools that use the following activity cost drivers/location bases: Number of labour (A-15, B-10); Product Number of Orders (A-50, B-150); Transactions labour Hours (A-500, B-2,000). The amount of overhead cost to be assigned to Product A using number of labour as the allocation base isYang Manufacturing Company manufactures two products (A and B). The overhead costs (£60,000) have been divided into three cost pools that use the following activity cost drivers/location bases: Number of labour (A-15, B-10); Product Number of Orders (A-50, B-150); Transactions labour Hours (A-500, B-2,000). The amount of overhead cost to be assigned to Product A using number of labour as the allocation base is
Yang Manufacturing Company manufactures two products (A and B). The overhead costs (£60,000) have been divided into three cost pools that use the following activity cost drivers/location bases: Number of labour (A-15, B-10); Product Number of Orders (A-50, B-150); Transactions labour Hours (A-500, B-2,000). The amount of overhead cost to be assigned to Product A using number of labour as the allocation base is
Explanation / Answer
CALCULATION OF OVERHEAD COST OF PRODUCT A ON THE BASIS OF DIRECT LABOUR Total Overhead Cost = £ 60,000.00 Ovehead cost will be assignned on the basis of number direct Labour 35.00 Labours (15 Labours + 20 Labours) Overhead Cost per Labour = £ 1,714.29 Per Labour Number of Labours for Product A = 15.00 Labours Total Overhead Cost (1714.29 X 15 Labours ) = £ 25,714.29 Answer = Overhead Cost for Product A = £ 25,714 (Round off)
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