Question

The controller of Hendershot Corporation estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: Wall Mirrors Specialty Windows Total expected units produced 8,800 1,850 Total expected material moves 880 1,750 Expected direct labor-hours per unit 14 12 The total materials handling cost for the year is expected to be $17,404.50. If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the specialty windows is closest to: (Round your intermediate calculations to 4 decimal places.)

Answer 1

Answer:

Specialty Windows= $11,585

Explanation:

Giving the following information:

Wall Mirrors - Specialty Windows

Total expected material moves 880 1,750

The total materials handling cost for the year is expected to be $17,404.50.

First, we need to calculate the estimated handling cost allocation rate.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 17,404.50/ (880 + 1,750)

Estimated manufacturing overhead rate= $6.62 per material move

Now, we can allocate costs:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Specialty Windows= 1,750*6.62= $11,585