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Sheridan Inc, manufactures two products, sweaters and jackets. The company has estimated its overhead in the order-processingCan you please explain how to solve this question?

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Answer #1

Answer

  • Order Processing Cost = $ 178,000
  • Total no. of orders = 8
  • Activity rate for allocation = $ 178000 / 8 = $ 22,250 per order
  • No. of order for Jacket = 6
  • Overhead allocated to Jacket = 6 orders x $ 22250
    = $ 133,500
  • Correct Answer = Option #4: $ 133,500
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