X Company has two production departments, A and B. The following
is budgeted information for all of its products in 2019, and actual
information for one of them, Product X:
Department A | All Products | Product X |
Overhead | $2,000,000 | -- |
Direct labor hours | 40,000 | 894 |
Machine hours | 100,000 | 1,000 |
Units produced | 54,000 | 700 |
Department B | ||
Overhead | $2,100,000 | -- |
Direct labor hours | 60,000 | 202 |
Machine hours | 140,000 | 890 |
Units produced | 46,000 | 700 |
Using a single-driver allocation system, with machine hours as the driver, how much overhead was allocated to Product X [round overhead rate(s) to two decimal places]
Solution:
Predetermined overhead rate = Estimated overhead / Estimated machine hours
= ($2,000,000 + $2,100,000) / (100000+140000) = $17.08 per machine hour
Overhead allocated to Product X = (1000 + 890) * $17.08 = $32,281.20
X Company has two production departments, A and B. The following is budgeted information for all...
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