Stealth,Inc.produces two types of drones,rotary and fixed wing.Stealth estimated $765,000 of manufacturing overhead,and 51,000 machine hours for the year.The allocation base for overhead costs is machine hours.The rotary model actually consumed 21,000 machine hours,and the fixed wing type consumed 30,000 machine hours.How much overhead is allocated to the fixed wing model?
A)$315,000
B)$450,000
C)$210,000
D)$150,000

Question

Quizplus · Accepted Answer

The allocation rate for overhead costs is calculated as follows:

Allocation rate = Total manufacturing overhead / Total machine hours 
= $765,000 / 51,000 
= $15 per machine hour

Using this rate, we can calculate the overhead allocated to each drone model:

Fixed wing overhead = Allocation rate x Fixed wing machine hours 
= $15 x 30,000 
= $450,000

Rotary overhead = Allocation rate x Rotary machine hours 
= $15 x 21,000 
= $315,000

Therefore, the overhead allocated to the fixed wing model is $450,000.