A company makes two products 1 and 2. The finishing activity pool has estimated manufacuring costs of $83,850 and the cost drivers for Product 1 is 322 and 240 for Product 2. The assembling activity pool has estimated costs of $73,925 and the cost drivers for Product 1 is 200 and 300 for Product 2. Direct labor hours for Product 1 is 522and 135 for Product 2. What is the total manufacturing overhead cost to be assigned to Product 1 using a single overhead rate as under tradional cost accounting? Round your final answer to the nearest whole dollar and do not put a dollar sign in your answer.

Question

Kirby

Business

22 April, 21:15

A company makes two products 1 and 2. The finishing activity pool has estimated manufacuring costs of $83,850 and the cost drivers for Product 1 is 322 and 240 for Product 2. The assembling activity pool has estimated costs of $73,925 and the cost drivers for Product 1 is 200 and 300 for Product 2. Direct labor hours for Product 1 is 522and 135 for Product 2. What is the total manufacturing overhead cost to be assigned to Product 1 using a single overhead rate as under tradional cost accounting? Round your final answer to the nearest whole dollar and do not put a dollar sign in your answer.

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Answers (1)

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Ramon Schmitt · Answer 1

Product 1 Costing Summary

Finishing Activity ($149 * 322) 47,978

Assembling Activity ($113 * 522) 67,426

Total 117,404

Therefore Total Manufacturing overheads are 117,404

Explanation:

The traditional cost accounting apportions the overhead cost to the products according to specific units of the department's cost driver used by the product.

Finishing Activity

Absorption Rate=Total Manufacturing Costs/Total Cost Driver Activity

= $ 83,850 / (322+240)

= $149 / product

Assembling Activity

Absorption Rate=Total Manufacturing Costs/Total Cost Driver Activity

= $ 73,925 / (522+135)

= $113 / labor hour