Scoresby Co. uses 3 machine hours and 1 direct labor hour to produce Product X. It uses 4 machine hours and 8 direct labor hours to produce Product Y. Scoresby's Assembly and Finishing Departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products? (A) Product X = $720; Product Y = $1,280 (B) Product X = $1,600; Product Y = $4,800 (C) Product X = $880; Product Y = $2,240 (D) Product X = $400; Product Y = $400

Question

Business

Ben Nunez

3 September, 13:36

Scoresby Co. uses 3 machine hours and 1 direct labor hour to produce Product X. It uses 4 machine hours and 8 direct labor hours to produce Product Y. Scoresby's Assembly and Finishing Departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products? (A) Product X = $720; Product Y = $1,280 (B) Product X = $1,600; Product Y = $4,800 (C) Product X = $880; Product Y = $2,240 (D) Product X = $400; Product Y = $400

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Answers (1)

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Sneakers · Answer 1

(C) Product X = $880; Product Y = $2,240

Explanation:

The applied overhead will be calculate by the product of the cost diver and the overhead rate:

Cost driver for each product:

Product X 3MH and 1LH

Product Y 4MH and 8LH

Overhead rate:

240 per machine hour

and 160 per labor hour

Product X 3MH x $240 + 1LH x $160 = 880

Product Y 4MH x $240 + 8LH x $160 = 2,240