**Question:**K Company estimates that overhead costs for the next year will be $2,871,000 for indirect labor and $870,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 87,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 4 direct labor hours?**Multiple Choice Options:**- $43.00- $33.00- $172.00 (Correct)- $132.00- None of the choices**Explanation:**To calculate the overhead assigned to a product requiring 4 direct labor hours, first determine the overhead rate per labor hour. 1. **Total Overhead Costs:** - Indirect labor: $2,871,000 - Factory utilities: $870,000 - Total Overhead = $2,871,000 + $870,000 = $3,741,0002. **Overhead Rate per Labor Hour:** - Total planned direct labor hours = 87,000 - Overhead Rate = Total Overhead / Total Labor Hours - Overhead Rate = $3,741,000 / 87,000 = $43.00 per hour3. **Overhead Assigned to Product:** - Overhead for 4 hours = Overhead Rate × 4 - Overhead for 4 hours = $43.00 × 4 = $172.00Therefore, the overhead assigned to a product requiring 4 direct labor hours is $172.00.

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Description: **Question:**K Company estimates that overhead costs for the next year will be $2,871,000 for indirect labor and $870,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 87,000 direct labor hours are pl

Total overhead costs = Indirect labor + factory utilities = $2871000+870000 = $3,741,000

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K Company estimates that overhead costs for the next year will be $2,871,000 for indirect labor and $870,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 87,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 4 direct labor hours? Multiple Choice $43.00 $33.00 $172.00 $132.00 None of the choices

K Company estimates that overhead costs for the next year will be $2,871,000 for indirect labor and $870,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 87,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 4 direct labor hours? Multiple Choice $43.00 $33.00 $172.00 $132.00 None of the choices

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Are the fixed costs as well as the 'other variable costs" included in the calculations of total overhead?
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