Video Corporation Video Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year:
Refer to Video Corporation.If the company uses total direct labor hours to allocate factory overhead,the machine maintenance cost allocated to LCD TV's would be:
A)$51,923
B)$55,385
C)$69,231
D)$72,000

Question

Video Corporation Video Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year:
 Refer to Video Corporation.If the company uses total direct labor hours to allocate factory overhead,the machine maintenance cost allocated to LCD TV's would be:
A)$51,923 
B)$55,385 
C)$69,231 
D)$72,000

Quizplus · Accepted Answer

To allocate factory overhead using total direct labor hours, we need to first calculate the predetermined overhead rate.

Predetermined overhead rate = Estimated total factory overhead cost / Estimated total direct labor hours
= ($1,544,111 + $384,250) / 23,055
= $64.33 per direct labor hour

Now, to allocate machine maintenance cost to LCD TVs:
Machine maintenance cost allocated to LCD TVs = Predetermined overhead rate x Direct labor hours for LCD TVs
= $64.33 x 860 = $55,385

Therefore, the best choice is B.

Video Corporation Video Corporation Has Two Product Lines: LCD Televisions