Powers,Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $25,500.Additional estimated information is given below. $$\begin{array} { | l | r | r | }
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 32 & \$ 44 \
\hline \text { Direct labor cost per unit } & \$ 55 & \$ 62 \
\hline \text { Number of units } & 540 & 350 \
\hline
\end{array}$$ Calculate the amount of overhead to be allocated to Satchels,if the actual units produced and direct labor costs equal the estimated amounts.(Round any percentages to two decimal places and your final answer to the nearest dollar.)
A) $464
B) $14,734
C) $10,765
D) $21,700

Question

Powers,Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $25,500.Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 32 & \$ 44 \
\hline \text { Direct labor cost per unit } & \$ 55 & \$ 62 \
\hline \text { Number of units } & 540 & 350 \
\hline
\end{array}$$ Calculate the amount of overhead to be allocated to Satchels,if the actual units produced and direct labor costs equal the estimated amounts.(Round any percentages to two decimal places and your final answer to the nearest dollar.)
A) $464
B) $14,734
C) $10,765
D) $21,700

Quizplus · Accepted Answer

To allocate the overhead cost to the satchels, we first need to calculate the predetermined overhead rate using the given information:

Predetermined overhead rate = Estimated total overhead costs / Estimated total amount of direct labor cost
= $25,500 / $170,000
= 0.15 or 15% per direct labor cost dollar

Next, we use this rate to allocate the overhead cost to the satchels:

Overhead allocated to satchels = Predetermined overhead rate x Actual amount of direct labor costs for satchels x Actual units produced of satchels
= 0.15 x $34,000 x 1,600
= $10,765

Therefore, the correct answer is C) $10,765.

Powers,Inc Calculate the Amount of Overhead to Be Allocated to Satchels,if