Stealth, Inc. produces two types of drones, rotary and fixed wing. Stealth estimated $ 1 comma 092 comma 000 of manufacturing overhead, and 52 comma 000 machine hours for the year. The allocation base for overhead costs is machine hours. The rotary model actually consumed 25 comma 000 machine hours, and the fixed wing type consumed 27 comma 000 machine hours. How much overhead is allocated to the rotary model?

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Business

Ellie Stuart

22 September, 07:17

Stealth, Inc. produces two types of drones, rotary and fixed wing. Stealth estimated $ 1 comma 092 comma 000 of manufacturing overhead, and 52 comma 000 machine hours for the year. The allocation base for overhead costs is machine hours. The rotary model actually consumed 25 comma 000 machine hours, and the fixed wing type consumed 27 comma 000 machine hours. How much overhead is allocated to the rotary model?

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Micah Macdonald · Answer 1

Overhead Rate per Machine Hour = Total Overheads / Total No of Machine Hours

=1092000/52000

=$21 per Machine Hour

Overheads Allotted Rotary Fixed Wing

Machine Hours 25000 27000

Rate Per Hour 21 21

Overheads Allocated $525000 $567000