Use the data below to calculate the amount of overhead allocated to product 1 assuming that factory overhead is allocated based on direct material cost.
overhead 62600
Production units
Product 1: 1954
Product 2: 3612
Machine hours per product
Product 1
Element | Units | $ per unit |
DM component 1 | 4 oz | 99.1/oz |
DL Assistant | 6 | 29 |
Product 2
Element | Units | $ per unit |
DM component 2 | 14.43 ounces | $5/ounce |
DL Assistant | 10 | 29 |
ANSWER
DIRECT MATERIAL COST
PRODUCT 1 = 14 OZ * $99.1 * 1954 UNITS = $2,710,980
PRODUCT 2 = 214.43 OZ * $5 * 3612 UNITS = $3,872,606
TOTAL DIRECT MATERIAL COST = $2,710,980 + $3,872,606 = $6,583,586
OVERHEAD ALOCATED TO PRODUCT 1
= $62600 * $2,710,980 / $6,583,586
= $25,777
Use the data below to calculate the amount of overhead allocated to product 1 assuming that...
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