Question

Using a single-driver allocation system, with machine hours as the driver, how much overhead was allocated to Product X [round overhead rate(s) to two decimal places]?

X Company has two production departments, A and B. The following is budgeted information for all of its products in 2019, and actual information for one of them, Product X: Department A All Products Product x Overhead $4,500,000 Direct labor hours 50,000 762 Machine hours 120,000 1,070 Units produced 51,000 640 Department B Overhead $1,800,000 Direct labor hours 50,000 Machine hours 120,000 810 Units produced 50,000 640 Using a single-driver allocation system, with machine hours as the driver, how much overhead was allocated to Product x [round overhead rate(s) to two decimal places]? 52275 186

Answer 1

--Requirement

	Department A Overhead	$4,500,000
	Department B Overhead	$1,800,000
A	Total Overheads	$6,300,000
B = 120000 + 120000	Total machine hours	240000
C = A/B	Overhead rate	$26.25
D = 1070 + 810	No of machine hour sused by Product X	1880
E = C x D	Overhead allocated to Product X	$49,350	Answer