Question

y Saudents Cn 17/ thru 20 Help Seve&Exit Required informetion (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 Finliklng 341,00 OLN ,sse $437,10 Assenbly 110,00 10,00 $310,000 Direct laber hours i Hachine hour s Overhead costs Assume that the Assembly Degpartment allocates overhead using a plantwide overhead rate based on machne hours How much total overhead wbe assigned to a product that requires 2 direct labor hour and 260 machine hours in the Assembly Department, and 3.00 direct labor hours and 06 machine hours in the Finishing Department? Mutple Choice $6 20 Sn90 $640

Answer 1

	Overheads cost	Machine hours
Assembly	$             310,000	310,000
Finishing	$             437,100	63,550
Total	$             747,100	373,550

Calculation of Overhead cost per machine hour
Total Overheads	$             747,100
Total Machine hours	373,550
Overhead cost per machine hour (747100/373550)	$                          2

Calculation of total overhead cost assigned to a product that requires 2.6 machine hours in assembly and 0.6 machine hour in finishing department
				Particulars	Machines hours required per unit	Overhead cost per machine hour	Machine Hours * Overhead cost per machine hour
				Assembly	2.6	$                  2.00	$       5.20
Finishing	0.6	$                  2.00	$       1.20
Total			$       6.40
Therefore the right answer is option (d) $ 6.4

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Answer to question 2:

the right answer is option (e) Total variable costs decreases as the volume increases.

Explanation: Total variable costs will be directly proportional to volume i.e., if Volume increases, variable costs increases and if volume decreases, variable costs decreases. In the given scenario, it is mentioned that Variable costs decreases as the volume increases which is incorrect.