Kleinveld Inc.
The Machinery department and Assembly department are two producing departments in Kleinveld Inc. Machinery’s total overhead is $30 000, using 200 machine hours and 500 direct labour hours. Assembly’s total overhead cost is $45 000, using 300 machine hours and 500 direct labour hours. The Machinery department overhead cost driver for product cost allocation is machine hours, while the Assembly department uses direct labour hours to allocate overhead costs to products.
-What is the overhead allocated to a product that uses 4 direct labour hours in both departments?

Question

Quizplus · Accepted Answer

The given information can be summarized in the following table:

|   | Direct labor hours | Overhead allocated |
|---|---|---|
| Department X | 2 | $180 |
| Department Y | 2 | $180 |

Since the product uses 4 direct labor hours in both departments, the total overhead allocated to the product would be the sum of the overhead allocated in both departments, which is $180 + $180 = $360. Therefore, the correct answer is choice C.

Kleinveld Inc. The Machinery Department and Assembly Department Are Two Producing Departments