Jaime Inc.manufactures two products, sweaters and jackets.The company has estimated its overhead in the order-processing department to be $180,000.The company produces 50,000 sweaters and 80,000 jackets each year.Sweater production requires 25,000 machine hours, jacket production requires 50,000 machine hours.The company places raw materials orders 10 times per month, 2 times for raw materials for sweaters and the remainder for raw materials for jackets.How much of the order-processing overhead should be allocated to jackets?
A)$90,000
B)$120,000
C)$110,770
D)$144,000

Question

Quizplus · Accepted Answer

The allocation of order-processing overhead to jackets can be calculated based on the proportion of orders placed for jackets out of the total orders. There are 10 orders placed per month, 2 for sweaters and 8 for jackets. Therefore, jackets account for 8 out of 10 orders, or 80% of the orders. The total overhead is $180,000, so the amount allocated to jackets is 80% of $180,000, which is $144,000.

Jaime IncManufactures Two Products, Sweaters and Jackets