Turnbull Company produces two products and their overhead consists of setups $20,000; machining $2,220,000; and packing $80,000.Data for the current year follow:

The overhead allocated to Delta assuming a single overhead rate based on machine hours and assuming ABC, respectively, are:
A) $1,856,000 and $1,878,000
B) $1,864,000 and $2,056,000
C) $1,856,000 and $1,842,000
D) $1,864,000 and $1,878,000

Question

Turnbull Company produces two products and their overhead consists of setups $20,000; machining $2,220,000; and packing $80,000.Data for the current year follow:

The overhead allocated to Delta assuming a single overhead rate based on machine hours and assuming ABC, respectively, are:
A) $1,856,000 and $1,878,000 
B) $1,864,000 and $2,056,000 
C) $1,856,000 and $1,842,000 
D) $1,864,000 and $1,878,000

Quizplus · Accepted Answer

Total costs = $20,000 + $2,220,000 + $80,000 = $2,320,000
Single OH Rate Beta: $2,320,000 x [4,000 ÷ 1,000 + 4,000] = $1,856,000
Setups: $20,000 ÷ 20 + 20 setups = $500 per setup
Machining: $2,220,000 ÷ 1,000 + 4,000 MH = $444 per MH
Packing: $80,000 ÷ 150 + 350 orders = $160 per order
Solution for ABC: Beta: 20 x $500 + 4,000 x $444 + 350 x $160 = $1,842,000

Turnbull Company Produces Two Products and Their Overhead Consists of Setups