Calculating Traditional Overhead Rates, Assigning Costs
Rawlings Corp. has two product lines, A and B. Rawlings has identified the following information about its overhead and potential cost drivers.
Total overhead | $75000 |
Cost drivers |
|
Number of labor hours | 2500 |
Number of machine hours | 46000 |
Required:
1. Suppose the Rawlings Corp. uses a traditional costing system with number of labor hours as the cost driver. Determine the amount of overhead assigned to each product line if Product A requires 70% of the labor hours and Product B requires 30%.
2. Suppose Rawlings uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line if Product A consumes 17,000 machine hours and Product B consumes 29,000.
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