Powers, Inc manufactures two kinds of bags—totes and satchels
The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $25,750. Additional estimated information is given below.
Totes Satchels
Direct materials cost per unit $31 $45
Direct labor cost per unit $52 $65
Number of units 500 350
Calculate the amount of overhead to be allocated to Satchels, if the actual units produced and direct labor costs equal the estimated amounts. (Round any percentages to two decimal places and your final answer to the nearest dollar.)
A) $495
B) $13,733
C) $12,017
D) $22,750
C .C)
Direct labor Number Total direct
cost per unit of units labor cost
Totes $52 500 $26,000
Satchels $65 350 $22,750
Total $48,750
Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base = $25,750 / $48,750 = 52.82% of direct labor cost
Manufacturing overhead cost allocated to Totes = $22,750 x 52.82% = $12,017
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