Exercise 6-48 (Algo) Two-Stage Cost Allocation and Predetermined Rates (LO 6-3, 4, 5) Channing Corporation makes two products (A1 and B2) that require direct materials, direct labor, and overhead. The following data refer to operations expected for next month.     A1 B2 Total Revenue $ 170,000   $ 510,000   $ 680,000   Direct material   65,000     130,000     195,000   Direct labor   54,000     128,250     182,250   Overhead:                   Direct-material related               42,900   Direct-labor related               40,095       Required: Channing uses a two-stage cost allocation system, It uses direct-material costs to allocate direct-materials related overhead and direct-labor costs to allocate direct-labor related overhead costs.   a. Compute the direct-material related overhead rate for next month. b. Compute the direct-labor related overhead rate for next month. c. What is the total overhead allocated to product A1 next month? d. What is the total overhead allocated to product B2 next month?

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Exercise 6-48 (Algo) Two-Stage Cost Allocation and Predetermined Rates (LO 6-3, 4, 5)

Channing Corporation makes two products (A1 and B2) that require direct materials, direct labor, and overhead. The following data refer to operations expected for next month.

 

  A1 B2 Total
Revenue $ 170,000   $ 510,000   $ 680,000  
Direct material   65,000     130,000     195,000  
Direct labor   54,000     128,250     182,250  
Overhead:                  
Direct-material related               42,900  
Direct-labor related               40,095  
 

 

Required:

Channing uses a two-stage cost allocation system, It uses direct-material costs to allocate direct-materials related overhead and direct-labor costs to allocate direct-labor related overhead costs.
 

a. Compute the direct-material related overhead rate for next month.

b. Compute the direct-labor related overhead rate for next month.

c. What is the total overhead allocated to product A1 next month?

d. What is the total overhead allocated to product B2 next month?

 

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