Figure 4-6 The Fast & Furious Company produces two products: toy planes and toy race cars. They use departmental overhead rates for the two production departments: molding and finishing. Molding uses machine hours to assign overhead and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Please find the following data:
Refer to Figure 4-6. How much overhead is applied to the planes?

Question

Figure 4-6 The Fast & Furious Company produces two products: toy planes and toy race cars. They use departmental overhead rates for the two production departments: molding and finishing. Molding uses machine hours to assign overhead and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Please find the following data:
 Refer to Figure 4-6. How much overhead is applied to the planes?

Quizplus · Accepted Answer

To calculate the overhead applied to the planes, we need to use the departmental overhead rates for molding, which uses machine hours. According to the table in Figure 4-6, molding has a total overhead of $438,000 and total machine hours of 30,000, which results in a departmental overhead rate of $14.60 per machine hour. Since the planes use 4,100 machine hours (2.0 hours per plane x 50,000 planes), the overhead applied to the planes is 4,100 x $14.60 = $59,860. Rounded to the nearest dollar, the answer is $59,860, which corresponds to choice C.

Figure 4-6 the Fast & Furious Company Produces Two Products