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21 September, 05:52

Wings Co. budgeted $572,000 manufacturing direct wages, 2,500 direct labor hours, and had the following manufacturing overhead: Overhead Cost Pool Budgeted Overhead Cost Budgeted Level for Cost Driver Overhead Cost Driver Materials handling $ 196,000 4,900 pounds Weight of materials Machine setup 19,600 560 setups Number of setups Machine repair 1,600 32,000 machine hours Machine hours Inspections 16,500 330 inspections Number of inspections Requirements for Job #971 which manufactured 4 units of product: Direct labor 20 hours Direct materials 220 pounds Machine setup 30 setups Machine hours 16,700 machine hours Inspections 15 inspections The total overhead of Job #971 under the ABC costing is:

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  1. 21 September, 06:40
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    Total allocated overhead = $11,435

    Explanation:

    Giving the following information:

    Materials handling $196,000 4,900 pounds

    Machine setup $19,600 560 setups

    Machine repair $1,600 32,000 machine hours

    Inspections $16,500 330 inspections

    Job 971

    Direct labor 20 hours

    Direct materials 220 pounds

    Machine setup 30 setups

    Machine hours 16,700 machine hours

    Inspections 15 inspections

    First, we need to calculate the estimated overhead rate for each activity:

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

    Materials handling = 196,000/4,900 = $40 per pound

    Machine setup = 19,600/560 = $35 per setup

    Machine repair = 1,600/32,000 = $0.05 per machine hour

    Inspections = 16,500/330 = $50 per inspection

    Now, we can allocate overhead:

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

    Materials handling = 40*220 = 8,800

    Machine setup = 35*30 = 1,050

    Machine repair = 0.05*16,700=835

    Inspections = 50*15 = 750

    Total allocated overhead = $11,435
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