The controller of Hendershot Corporation estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: The total materials handling cost for the year is expected to be $16,652.90.If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to: (Round your intermediate calculationsto 4 decimal places.)
A) $12,888
B) $14,721
C) $9,560
D) $7,911

Question

The controller of Hendershot Corporation estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:  The total materials handling cost for the year is expected to be $16,652.90.If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to: (Round your intermediate calculationsto 4 decimal places.)
A) $12,888 
B) $14,721 
C) $9,560 
D) $7,911

Quizplus · Accepted Answer

First, we need to calculate the predetermined overhead rate:
Predetermined overhead rate = estimated total overhead cost ÷ estimated total direct labor-hours
= $16,652.90 ÷ 1,379
= $12.07 per direct labor-hour

Next, we need to allocate the overhead cost to each product based on the direct labor-hours used for each product:
Wall mirrors: 933 direct labor-hours * $12.07 per direct labor-hour
= $11,248.31
Decorative frames: 446 direct labor-hours * $12.07 per direct labor-hour
= $5,373.59

Therefore, the total materials handling cost allocated to wall mirrors is closest to $14,721. (Round to the nearest dollar)

The Controller of Hendershot Corporation Estimates the Amount of Materials