Question

! Required information [The following information applies to the questions displayed below.) Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Direct labor hours Machine hours Overhead costs Assembly 290,000 DLH 490,000 MH $ 490,000 Finishing 159,000 DLH 144,550 MH $779,100 Assume that the Assembly Department allocates overhead based on machine hours, and the Finishing Department allocates overhead based on direct labor hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 4.4 machine hours in the Assembly Department, and 5.0 direct labor hours and 0.6 machine hours in the Finishing Department?

Answer 1

A product of Angle max goes through 2 operations assembling and finishing. We have to find the assembly department OH and the finishing department OH for the product in total. The assembly department OH is allocated on machine hr basis, and finishing department OH is allocated on direct labor hr basis.

Assembly OH = $ 490000/490000 = $1 per machine hr.

$1 per machine hr * 4.4 machine hr = $ 4.4 assembly department OH

Finishing OH = $ 779100/ 159000 = $4.9 per direct labour hr.

$4.9 per direct labour hr * 5 direct labour hrs = $ 24.5 finishing department OH  

Assembly + Finishing = $4.4 + $24.5

= $28.9