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24 June, 16:37

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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  1. 24 June, 19:32
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    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
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