Question

Hollywood Co. computed an overhead rate for machining costs ($1,500,000) of $15 per machine hour. Machining costs are driven by machine hours. The company produces two products, Chapel and Tower. Chapel requires 60,000 machine hours, while Tower requires 40,000 machine hours. Using activity-based costing, machining costs using machine hours to assign overhead to each product is

Answer 1

Results are below.

Step-by-step explanation:

To allocate overhead to Chapel and Tower, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Chapel:

Allocated MOH= 15*60,000

Allocated MOH= $900,000

Tower:

Allocated MOH= 15*40,000

Allocated MOH= $600,000