Scoresby Co. uses 3 machine hours and 1 direct labor hour to produce Product X. It uses 4 machine hours and 8 direct labor hours to produce Product Y. Scoresby's Assembly and Finishing Departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products?
A) Product X = $1,600; Product Y = $4,800
B) Product X = $400; Product Y = $400
C) Product X = $880; Product Y = $2,240
D) Product X = $720; Product Y = $1,280

Question

Quizplus · Accepted Answer

To calculate the overhead cost for each product, we need to multiply the number of machine hours and direct labor hours used by the respective overhead rates:

For Product X:
Machine hours = 3
Overhead rate = $240/machine hour
Overhead cost = 3 x $240 = $720

Direct labor hours = 1
Overhead rate = $160/direct labor hour
Overhead cost = 1 x $160 = $160

Total overhead cost for Product X = $720 + $160 = $880

For Product Y:
Machine hours = 4
Overhead rate = $240/machine hour
Overhead cost = 4 x $240 = $960

Direct labor hours = 8
Overhead rate = $160/direct labor hour
Overhead cost = 8 x $160 = $1,280

Total overhead cost for Product Y = $960 + $1,280 = $2,240

Therefore, the answer is C, Product X = $880; Product Y = $2,240.