Question

Bag​ Ladies, 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 $ 25,000. Additional estimated information is given below.

Totes Satchels

DM cost per unit $33 $43

DL cost per unit $52 $60

Number of Units 520 350

Calculate the amount of overhead to be allocated to Totes.​ (Round any percentages to two decimal places and your final answer to the nearest​ dollar.)

Answer 1

• Step 1: Calculate Total estimated direct labor cost

Working		Totes	Satchels
A	No. of units	520	350
B	DL cost per unit	$                          52	$                         60
C = A x B	Total Direct Labor Cost	$                  27,040	$                 21,000

• Step 2: Calculate Plant Wide rate

A	Estimated Overhead cost	$                  25,000
B	Total Direct Labor Cost	$                  48,040
C = (A/B) x 100	Single Plantwide Rate	52.04% of direct labor cost

• Step 3: Overhead allocation

Working		Totes	Satchels
A	Total Direct Labor Cost	$                  27,040	$                 21,000
B	Single Plantwide Rate	52.04%	52.04%
C = A x B	Amount of Overhead allocated	$                  14,072 = ANSWER	$                 10,928

• Answer: Amount of Overhead allocated to TOTEs = $ 14,072