Question

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: Product X All Products $6,900,000 60,000 120,000 57,000 829 1,080 580 Department A Overhead Direct labor hours Machine hours Units produced Department B Overhead Direct labor hours Machine hours Units produced 148 $2,000,000 40,000 140,000 40,000 810 580 Using a single-driver allocation system, with direct labor hours as the driver, how much overhead was allocated to Product X [round overhead rate(s) to two decimal places)?

Answer 1

--Requirement

	Department A Overhead	$6,900,000
	Department B Overhead	$2,000,000
A	Total Overheads	$8,900,000
B = 60000 + 40000	Total direct labor hours	100000
C = A/B	Overhead rate	$89.00
D = 829 + 148	No of Direct labor hour sused by Product X	977
E = C x D	Overhead allocated to Product X	$86,953	Answer