Dragon Fire Hot Sauce makes two types of hot sauces-meek and mild.Budgeted information for the two flavors appears below: $\begin{array}{lrr}&\text { Meek }&\text { Mild }\
\text { Sales } & \$ 600,000 & \$ 400,000 \
\text { Direct materials } & \$ 100,000 & \$ 120,000 \
\text { Direct labor cost } & \$ 108,000 & \$ 180,000 \
\text { Labor hourly cost } & \$ 12,00 & \$ 12,00
\end{array}$ The company estimates it will incur $345,600 in overhead costs for the period.Dragon Fire allocates overhead cost to products based on the labor hours worked on each product.How much is the total overhead applied to Meek?
A)$130,500
B)$129,600
C)$1,566
D)$348,000

Question

Quizplus · Accepted Answer

To calculate the total overhead applied to Meek, first determine the labor hours for each product by dividing the direct labor cost by the labor hourly cost. For Meek, it's $108,000 / $12 = 9,000 hours. The total labor hours for both products is 9,000 (Meek) + 15,000 (Mild) = 24,000 hours. The overhead rate per labor hour is $345,600 / 24,000 hours = $14.4 per hour. Therefore, the overhead applied to Meek is 9,000 hours * $14.4 = $129,600.

Dragon Fire Hot Sauce Makes Two Types of Hot Sauces-Meek