Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.
Car
Estimated wheels produced car = 40,000 TRUCK=10,000
Direct labor hours per wheel car=1 Truck= 3
Total estimated overhead costs for the two product lines are $770,000.
1) What is the cost object?
2) Allocate the overhead based on direct labor hours.
b) Show your work.
c) Allocate the overhead using your answers from b.
d) Which method should the company utilize?