Figure 4-6 Cabrini Company produces two products: toy trucks and toy 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 trucks and 250,000 cars are produced.Please find the following data:

-Refer to Figure 4-6.How much overhead is applied to the trucks?

Question

Figure 4-6 Cabrini Company produces two products: toy trucks and toy 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 trucks and 250,000 cars are produced.Please find the following data:
 
-Refer to Figure 4-6.How much overhead is applied to the trucks?

Quizplus · Accepted Answer

To calculate the overhead applied to the trucks, we need to use the departmental overhead rates for the molding department. From the table, we know that the molding department overhead rate is $4 per machine hour.

The number of machine hours required to produce the 50,000 trucks is not given, so we need to estimate it. We can do this by using the information provided about the production of the cars. We know that 250,000 cars were produced, and the molding department overhead rate is $4 per machine hour.

Total machine hours = 250,000 cars x 0.5 machine hours per car = 125,000 machine hours
Overhead applied to production = 125,000 machine hours x $4 per machine hour = $500,000

Now, we need to allocate this overhead between the two products based on their respective production levels. Since 50,000 trucks were produced, the overhead applied to the trucks is:

Overhead applied to trucks = ($500,000 x 50,000 trucks) / (50,000 trucks + 250,000 cars) = $219,500

Therefore, the answer is C.

Figure 4-6 Cabrini Company Produces Two Products: Toy Trucks and Toy