Merone Company allocates materials handling cost to the company's two products using the below dа ta:

Modular Homes Prefab Barns

Total expected units produced 6,200 9,200

Total expected material moves 620 220

Expected direct labor-hours per unit 820 320

The total materials handling cost for the year is expected to be $321,120.

If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the prefab barns is closest to: (Round your intermediate calculations to 4 decimal places.)

A. $156,855.00

B. $118,366.98

C. 220,770.00

D. $117,760.00

The correct answer is D.

Explanation:

Giving the following information:

Modular Homes - Prefab Barns

Total expected units produced 6,200 9,200

Expected direct labor-hours per unit 820 320

The total materials handling cost for the year is expected to be $321,120.

First, we need to calculate the total amount of expected direct-labor hours, because it will be used as the allocation base:

Total direct-labor hours = (6,200units*820hours) + (320hours*9,200units) = 8,028,000 hours

Now, we can determine the estimated manufacturing overhead rate:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = 321,120/8,028,000 = $0.04 per direct labor hour

Finally, we can allocate overhead:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated overhead = 0.04 * (320hours*9,200units) = $117,760