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4 September, 08:59

sasse inc manufactures 2 products hammers and screwdrivers the company has estimated its overhead in the assembling department to be 2000000. the company produce 300000 hammes and 600000 screwdrivers each year. each hammer uses 2 parts and ech screwdriver uses 3 parts. how much of the assembly overhead should be allocated to ammer

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  1. 4 September, 09:06
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    The answer is: $500,000

    Explanation:

    In order to allocate overhead cost we will use the overhead cost per part ratio:

    Total overhead cost = $2,000,000

    Hammers produced = 300,000 x 2 parts per hammer = 600,000 parts

    Screwdrivers produced = 600,000 x 3 parts per hammer = 1,800,000 parts

    Total parts involved in the production process = 2,400,000 parts

    Overhead cost per part = $2,000,000 / 2,400,000 parts = $0.83 per part

    Total overhead cost allocated to the production of hammers = 600,000 parts used in hammer production x $0.83 per part = $500,000
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