Levine Company Levine Company produces two products: A and B)The company has three overhead functions that are required for both products.
Below is production information for Products A and B: B)The company has three overhead functions that are required for both products.
Below is production information for Products A and B:B The company has three overhead functions that are required for both products.
Below is production information for Products A and B:

A)$ 88.64.
B)$123.64.
C)$135.00.
D)None of the responses are correct.

Question

Levine Company Levine Company produces two products: A and B)The company has three overhead functions that are required for both products.
Below is production information for Products A and B: B)The company has three overhead functions that are required for both products.
Below is production information for Products A and B:B The company has three overhead functions that are required for both products.
Below is production information for Products A and B:

A)$ 88.64.
B)$123.64.
C)$135.00.
D)None of the responses are correct.

Quizplus · Accepted Answer

The total overhead cost is $23,200 ($5,900 + $9,300 + $8,000). To allocate this cost to Products A and B, the company needs to use an overhead allocation rate. Based on the given information, the best allocation base would be direct labor hours. Product A requires 20 direct labor hours and Product B requires 24 direct labor hours, for a total of 44 direct labor hours. Dividing the total overhead cost by the total direct labor hours gives an overhead allocation rate of $527.27 per direct labor hour ($23,200 ÷ 44). Multiplying this overhead rate by the direct labor hours required for each product gives an allocated overhead cost of $10,545.45 for Product A and $12,654.55 for Product B. Adding this allocated cost to the direct materials and direct labor cost for each product gives a total cost of $1,858.09 for Product A ($786.45 + $983.00 + $88.64) and $2,778.19 for Product B ($1,090.00 + $1,564.55 + $123.64). Therefore, Choice A is the correct answer.

Levine Company Levine Company Produces Two Products: a and B)The