Question

Gibson Hats Corporation manufactures three different models of hats: Vogue, Beauty, and Glamour, Gibson expects to incur $666,000 of overhead cost during the next fiscal year. Other budget information follows. Direct labor hours Machine hours Vogue Beauty Glamour Total 3,400 5,400 9,200 18,000 1,200 2,050 2,300 5,550 Required a. Use direct labor hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product b. Use machine hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product. Complete this question by entering your answers in the tabs below. Required A Required B Use direct labor hours as the cost driver to compute the allocation rate and the budgeted overhead cost for each product. Allocation Rate x Weight of Base - Allocated Cost X Product Vogue Beauty Glamour X X Total Required: Required B > < Prev 2 of 5 !!! Next >

Answer 1

Solution A:

Product	Allocation rate	*	Weight of Base	=	Allocated Cost
Vogue	$37.00	*	3400	=	$125,800.00
Beauty	$37.00	*	5400	=	$199,800.00
Glamour	$37.00	*	9200	=	$340,400.00
Total					$666,000.00

Solution B:

Product	Allocation rate	*	Weight of Base	=	Allocated Cost
Vogue	$120.00	*	1200	=	$144,000.00
Beauty	$120.00	*	2050	=	$246,000.00
Glamour	$120.00	*	2300	=	$276,000.00
Total					$666,000.00