Assignment:
Allocating overhead costs among products
Q: Nevin Company makes three products in its factory: plastic cups, plastic tablecloths, and plastic bottles. The expected overhead costs for the next fiscal year include the following.
| Factory manager's salary |
$ |
130,000 |
|
| Factory utility costs |
|
65,000 |
|
| Factory supplies |
|
25,000 |
|
|
|
|
|
| Total overhead costs |
$ |
220,000 |
|
|
|
|
Nevin uses machine hours as the cost driver to allocate overhead costs. Budgeted machine hours for the products are as follows.
| Cups |
400 |
hours |
| Tablecloths |
700 |
|
| Bottles |
1,100 |
|
|
|
|
| Total machine hours |
2,200 |
|
|
|
Required:
(a) Allocate the budgeted overhead costs to the products.
| Product |
Allocated Cost |
| Cups |
$ |
| Tablecloths |
|
| Bottles |
|
|
|
| Total |
$ |
|
|
|